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Chemistry, 13.02.2020 22:48 angelgarcia12379

A chemical company is considering replacing a batch reactor with a continuous reactor. The old unit cost $40,000 when new 5 years ago, and depreciation has been charged on a straightline basis using an estimated service life of 10 years with a final salvage value of $1000.The new unit would cost $70,000. It would save $15,000 per year in expenses not including depreciation. The straight-line depreciation period is taken to be 10 years with a zero salvage value. All costs other than those for labor, insurance, taxes, and depreciation may be assumed to be the same for both units. The old unit can now be sold for $5000. Income tax is 35 percent per year. If the after-tax minimum acceptable return on any investment is 15 percent, should the replacement be made?

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A chemical company is considering replacing a batch reactor with a continuous reactor. The old unit...
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