A currently owned shredder used in a refuse-powered electrical generating plant has a present net realizable value of $200,000 and is expected to have a market value of $10,000 after 4 years. Operating and maintenance disbursements are $100,000 per year. An equivalent shredder can be leased for $200 per day plus $80 per hour of actual use as determined by an hour meter, with both components assumed to be paid at year-end. Actual use is expected to be 1,500 hours and 250 days per year. Using a 4-year planning horizon, a before-tax analysis, and a MARR of 15 percent, determines the preferred alternative using the annual cost criterion.
Show the EUAC values used to make your decision:
Keep existing shredder: $
Lease equivalent shredder: $