A biogas plant has a five-year-old equipment that was initially purchased for $80,000. The equipment can be kept in service for an additional five years or it can be sold for $45,000 and replaced with new equipment. The purchase price of the replacement equipment is $65,000. The estimated market value and operating and maintenance costs over the five-year planning period are shown in the table given below. Assuming the MARR is 8%: (a) Determine the economic life of the challenger, and (b) Determine when the defender should be replaced.
This question was answered on: Jul 11, 2017
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