3- Suppose a company has a lift truck but is considering purchasing a new electric lift truck that would cost $1000000 and has operating cost of $19000 in the first year. For the remaining years, operating costs increase each year by 5% over the previous year's operating costs. Ií loses 17.5% of its value every year from the previous year's salvage value. The lift truck has a maximum life of 5 years. The firm's required rate of retum is 5%. Find the economic service life of this new machine. Final answer:
3- Suppose a company has a lift truck but is considering purchasing a new electric lift truck that would cost $1000000 and has operating cost of $19000 in the first year. For the remaining years, operating costs increase each year by 5% over the previous year's operating costs. Ií loses 17.5% of its value every year from the previous year's salvage value. The lift truck has a maximum life of 5 years. The firm's required rate of retum is 5%. Find the economic service life of this new machine. Final answer:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![3- Suppose a company has a lift truck but is considering purchasing a new electric lift truck that would cost $1000000
and has operating cost of $19000 in the first year. For the remaining years, operating costs increase each year by
5% over the previous year's operating costs. It loses 17.5% of its value every year from the previous year's salvage
value. The lift truck has a maximum life of 5 years. The firm's required rate of retum is 5%. Find the economic
service life of this new machine.
Final answer:](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcbab2b14-4818-4816-9151-8a5501679532%2F4e8bf4fe-08e7-4368-877f-8ed2214fbc14%2Fxk0gj7_processed.png&w=3840&q=75)
Transcribed Image Text:3- Suppose a company has a lift truck but is considering purchasing a new electric lift truck that would cost $1000000
and has operating cost of $19000 in the first year. For the remaining years, operating costs increase each year by
5% over the previous year's operating costs. It loses 17.5% of its value every year from the previous year's salvage
value. The lift truck has a maximum life of 5 years. The firm's required rate of retum is 5%. Find the economic
service life of this new machine.
Final answer:
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