A company is considering purchasing a machine for manufacturing that costs $30,000. The salvage value and O&M costs for the next 7 years is given in the following table. The Equivalent Uniform Annual Cost (EUAC) is computed for each year assuming the equipment was sold at the end of that year and a MARR of 6%. What is the optimal economic life of the machine? Yr Salvage Value O&M Costs EUAC 1 $15,000 $1,200 $18,000 2 $14,400 $2,100 $11,909 3 $13,800 $3,000 $10,753 4 $13,200 $3,900 $10.825 5 $12,600 $4,800 $11,382 6 $12,000 $5,700 $12,178 7 $11,400 $6,600 $13,106
A company is considering purchasing a machine for manufacturing that costs $30,000. The salvage value and O&M costs for the next 7 years is given in the following table. The Equivalent Uniform Annual Cost (EUAC) is computed for each year assuming the equipment was sold at the end of that year and a MARR of 6%. What is the optimal economic life of the machine? Yr Salvage Value O&M Costs EUAC 1 $15,000 $1,200 $18,000 2 $14,400 $2,100 $11,909 3 $13,800 $3,000 $10,753 4 $13,200 $3,900 $10.825 5 $12,600 $4,800 $11,382 6 $12,000 $5,700 $12,178 7 $11,400 $6,600 $13,106
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A company is considering purchasing a machine for
| Yr | Salvage Value | O&M Costs | EUAC |
| 1 | $15,000 | $1,200 | $18,000 |
| 2 | $14,400 | $2,100 | $11,909 |
| 3 | $13,800 | $3,000 | $10,753 |
| 4 | $13,200 | $3,900 | $10.825 |
| 5 | $12,600 | $4,800 | $11,382 |
| 6 | $12,000 | $5,700 | $12,178 |
| 7 | $11,400 | $6,600 | $13,106 |
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