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1 A new machine was bought for $12,000 with a life of eight years and no salvage value. Its operating costs was follows: (beginning on first year = 5%. ) A₁. $8000, Determine the present equivalent (at time zero/PW) above accompanying Geometric Sequence of cash flows. Let MARR=10%

1 A new machine was bought for $12,000 with a life of eight years and no salvage value. Its operating costs was follows: (beginning on first year = 5%. ) A₁. $8000, Determine the present equivalent (at time zero/PW) above accompanying Geometric Sequence of cash flows. Let MARR=10%

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1 A new machine was bought for $12,000 with a life of eight years and no salvage value. Its operating costs w follows (beginning on first year = 5%. ) A₁- $8000, Determine the present equivalent (at time zero/PW of above accompanying Geometric Sequence of cash flows. Let MARR=10%
Transcribed Image Text:1 A new machine was bought for $12,000 with a life of eight years and no salvage value. Its operating costs w follows (beginning on first year = 5%. ) A₁- $8000, Determine the present equivalent (at time zero/PW of above accompanying Geometric Sequence of cash flows. Let MARR=10%
Expert Solution
Step 1: State the information

Initial cost=$12000

Salvage value=0

Operating cost at year 1=8000

Operating cost increases by 5% each year

MARR=10%

Tima=8 years



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