Engineering Board Exam Reviewer · Replacement Analysis · medium
An existing machine (the defender) has a market value of P80,000, 3 years of remaining life, a salvage value of P20,000 at the end of that life, and annual operating costs of P25,000. Find its equivalent uniform annual cost at 12% interest, using its market value as the investment.
- P52,380.94
- P58,307.92
- P49,980.94
- P27,380.94
Answer
A. P52,380.94
Solution
EUACD=(80,000-20,000)(A/P,12%,3)+20,000(0.12)+25,000=60,000(0.416349)+2,400+25,000=P52,380.94.
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