2) (15 points) A company just purchased a new machine for $24,000. First year's O&M costs are expected to be $1,800 and they are expected to increase by 6% each year over the previous year's cost from the second year onwards. The company expects to sell the machine for $2,400 at the end of its useful life of 6 years. MARR is 10% per year compounded annually. a) (8 points) What is the capital recovery (CR) cost for this new machine over its life of 6 years? b) (7 points) Determine the equivalent uniform annual cost (EUAC) for owning and operating this machine over its life of 6 years.
2) (15 points) A company just purchased a new machine for $24,000. First year's O&M costs are expected to be $1,800 and they are expected to increase by 6% each year over the previous year's cost from the second year onwards. The company expects to sell the machine for $2,400 at the end of its useful life of 6 years. MARR is 10% per year compounded annually. a) (8 points) What is the capital recovery (CR) cost for this new machine over its life of 6 years? b) (7 points) Determine the equivalent uniform annual cost (EUAC) for owning and operating this machine over its life of 6 years.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:2) (15 points) A company just purchased a new machine for $24,000. First year's O&M costs are expected to
be $1,800 and they are expected to increase by 6% each year over the previous year's cost from the second year
onwards. The company expects to sell the machine for $2,400 at the end of its useful life of 6 years. MARR is
10% per year compounded annually.
a) (8 points) What is the capital recovery (CR) cost for this new machine over its life of 6 years?
b) (7 points) Determine the equivalent uniform annual cost (EUAC) for owning and operating this machine
over its life of 6 years.
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