2. The following maintenance alteratives are considered for a new assembly line that has an acquisition cost of $250,000. Each has distinct service life expectancies and corresponding probabilities. Determine the maintenance regime most likely to yield an annualized overall cost less than $32k, given an annual rate of 7%. Maintenance regime Service life years (probability) $0 throughout life 7(0.2) 8(0.6) 9(0.2) $25000 (in year 4) 8 (0.15) 10 (0.5) 12 (0.35) $35,000 (years 3 and 6) 10 (0.25) 12 (0.5) 14 (0.25) $75,000 (year 6) 12 (0.3) 13 (0.33) 15 (0.37)

2. The following maintenance alteratives are considered for a new assembly line that has an acquisition cost of $250,000. Each has distinct service life expectancies and corresponding probabilities. Determine the maintenance regime most likely to yield an annualized overall cost less than $32k, given an annual rate of 7%. Maintenance regime Service life years (probability) $0 throughout life 7(0.2) 8(0.6) 9(0.2) $25000 (in year 4) 8 (0.15) 10 (0.5) 12 (0.35) $35,000 (years 3 and 6) 10 (0.25) 12 (0.5) 14 (0.25) $75,000 (year 6) 12 (0.3) 13 (0.33) 15 (0.37)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section9.A: Depreciation

Problem 1P

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