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Author Question: Stensels, a plastics processor, is considering the purchase of a high-speed extruder as one option. ... (Read 52 times)

Tazate

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Stensels, a plastics processor, is considering the purchase of a high-speed extruder as one option.  The new extruder would cost $50,000 and would have a residual value of $5,000 at the end of its 8 year life.  The annual operating expenses of the new extruder would be $8,000.  The other option that Stensels has is to rebuild its existing extruder. The rebuilding would require an investment of $30,000 and would extend the life of the existing extruder by 8 years. The existing extruder has annual operating costs of $11,000 per year and does not have a residual value.  Stensels' discount rate is 14%.  Using net present value analysis, which option is the better option and by how much?
◦ Better by $4,330 to rebuild existing extruder
◦ Better by $6,083 to purchase new extruder
◦ Better by $4,330 to purchase new extruder
◦ Better by $6,083 to rebuild existing extruder


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Marked as best answer by Tazate on Jan 5, 2020

Carliemb17

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Tazate

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Reply 2 on: Jan 5, 2020
YES! Correct, THANKS for helping me on my review


steff9894

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Reply 3 on: Yesterday
:D TYSM

 

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