(Solution) - Mary O Leary s company ships fine wool garments from County Cork -(2025 Original AI-Free Solution)

Paper Details

Mary O'Leary's company ships fine wool garments from County Cork, Ireland. Five years ago she purchased some new automated packing equipment having a first cost of $125,000 and a MACRS class life of 7 years. The annual costs for operating, maintenance, and insurance, as well as market value data for each year of the equipment's l0-year useful life are as follows:

Now Mary is looking at the remaining 5 years of her investment in this equipment, which she had initially evaluated on the basis of an after-tax MARR of 25% and a tax rate of35% on ordinary equipment. Assuming that the replacement repeatability assumptions are valid, answer the following questions.
(a) What is the before-tax marginal cost for the remaining 5 years?
(b) When, if at all, should Mary replace this packing equipment if a new challenger, with a minimum EUAC of $110,000, has been identified: Use the data from the table and the decision map from Figure 13-1.