Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 23

Nano Technologies intends to use the newest and finest equipment in its labs. Accordingly, a senior engineer has recommended that a 2-year-old piece of precision measurement equipment be replaced immediately. This engineer believes it can be shown that the proposed equipment is economically advantageous at a 10% per year return and a planning horizon of 3 years.
a) Perform the replacement analysis using the annual worth method for a specified 3-year study period.
b)Determine the challenger's capital recovery amount for the 3-year study period and the expected full life. Comment on the effect made by the 3-year study period.