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6. You purchase a new piece of equipment for $65,000. Your net cash flow the first year is $18,000 but will increase by $2,500 per year the next year and the same for each year after. The equipment has a ten-year service life and a salvage value of $5,000. The interest rate is 9%. What is the annual capital cost and what is the equivalent annual savings?

6. You purchase a new piece of equipment for $65,000. Your net cash flow the first year is $18,000 but will increase by $2,500 per year the next year and the same for each year after. The equipment has a ten-year service life and a salvage value of $5,000. The interest rate is 9%. What is the annual capital cost and what is the equivalent annual savings?

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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6. You purchase a new piece of equipment for $65,000. Your net cash flow the first year is $18,000 but will increase by $2,500 per year the next year and the same for each year after. The equipment has a ten-year service life and a salvage value of $5,000. The interest rate is 9%. What is the annual capital cost and what is the equivalent annual savings?
Transcribed Image Text:6. You purchase a new piece of equipment for $65,000. Your net cash flow the first year is $18,000 but will increase by $2,500 per year the next year and the same for each year after. The equipment has a ten-year service life and a salvage value of $5,000. The interest rate is 9%. What is the annual capital cost and what is the equivalent annual savings?
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