A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated. First cost, $ −900,000 Equipment replacement cost in year 2, $ −300,000 Annual operating cost, $/year −950,000 Salvage value, $ 250,000 Life, years 4 At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using tabulated factors. The equivalent annual cost of the project is $− .
A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated. First cost, $ −900,000 Equipment replacement cost in year 2, $ −300,000 Annual operating cost, $/year −950,000 Salvage value, $ 250,000 Life, years 4 At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using tabulated factors. The equivalent annual cost of the project is $− .
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated.
| First cost, $ | −900,000 |
| Equipment replacement cost in year 2, $ | −300,000 |
| Annual operating cost, $/year | −950,000 |
| Salvage value, $ | 250,000 |
| Life, years | 4 |
At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using tabulated factors.
The equivalent annual cost of the project is $− .
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