Engineering Board Exam Reviewer · Replacement Analysis · hard
Using the challenger from the earlier problems (EUAC about P52,537), what market value of the defender (salvage P20,000 after 3 years, operating costs P25,000 per year, 12% interest) would make the two alternatives exactly equal in EUAC?
- P80,000
- P80,373.67
- P79,935.23
- P86,138.07
Answer
B. P80,373.67
Solution
Set EUACD=EUACC: (MV-20,000)(A/P,12%,3)+20,000(0.12)+25,000=52,536.52. Then MV-20,000= 52,536.52-27,4000.416349, so MV=P80,373.67.
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