Engineering Economic Analysis

(Chris Devlin) #1
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(^412) REPLACEMENTANALYSIS
FIGURE 13-4 EUAGvalues for different
remaining lives.
$900
$800
"
$600
"" $500""
o~
u$400
$300
$200
$LOO ti
EIJACOf II).vested CapiW
(^11121314). 1'5
I!!"
Age QfEqUipment
3 4
Yearn
5
"
Ii
I~^12
II
\1 The lowest EUAC is $700. That nUJ;Ilbercan be compared with the challenger's best EUAC to
determinewhethertbe equipmentshouldbe replacednow. "-
These data are plotted "jp'Fig. 13-4. We see that the aIWualcost of continuing to u§e the
equipment is jncreasing. Jt ISreasonable to assume tqat if the equipment is not replaf:ed110W,.
it will be reviewed again next year. I:fthe def~llder's and challeilgefs cost,data do not chapge,
we can cOl1,1putethe'defender's marginal co~t toyxten.d seiYice ~ach year to decide wheI1;.to
replace. ~ ~
Example 13-6 represents a common situation. The salvage value is stable, but the
maintenance cost is increasing.The marginal cost to extend the defender's life and its total
EUAC will continue to increase as time passes, which means that the defender's lowest
EUAC will be based on retaining the defender for 1 more year. This is not always the case,
as is shown in Example 13-7.
!'3:year-okirpacliine, whose Currentrpatket value is $5000, is beIng analyzedlo deternlin~its
ecoIioIQiclife il).a reI>!ac~mentatlalysis. Compute its lowest EUi\C using a 10% mter:estf(,ite.
i~.g~l\l$,-~aJWe~a~c~..£.s,Uteae..~i~Il!~~~q~:.ta~= ~;< ~ ..-L1:-'= "


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