You own several copiers that are currently valued at RIO 000 all together. .Annual operating and maintenance costs for all copiers are estimated at R9000 next year, increasing by 10% each year thereafter. Salvage values decrease at a rate of 20% per year.
You are considering replacing your existing copiers with new ones that have a suggested retail price of R25 000 . Operating and maintenanc e costs for the new equipment will be R6000 over the first year, increasing by 10% each year thereafter. The salvage value of the new equipment is well approximated bv a 20% drop from the suggested retail price per year. Furthermore , vou can ge t a trade - in allowance of R12 000 for your equipment if you purchase the new equipment at its suggested retail price. Your MARR is 8%. Should vou replace vour existing equipment now?