A contractor has a 4-year concrete mixer whose first cost was $6,000, having 3 more years to live before being scrapped and sold at $801. It could now be sold for $11,922. It has an annual cost for operation and maintenance of $9,352. Its replacement is being proposed with a new machine whose first cost will be $8,000 having a life of 9 years and salvage value $1,600. It has an operating cost of $800 per year and maintenance cost of $320 per year. Ifthe interest is 20% cpd-a, what is the Annual Equivalent Cost of the Old Machine?
A contractor has a 4-year concrete mixer whose first cost was $6,000, having 3 more years to live before being scrapped and sold at $801. It could now be sold for $11,922. It has an annual cost for operation and maintenance of $9,352. Its replacement is being proposed with a new machine whose first cost will be $8,000 having a life of 9 years and salvage value $1,600. It has an operating cost of $800 per year and maintenance cost of $320 per year. Ifthe interest is 20% cpd-a, what is the Annual Equivalent Cost of the Old Machine?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A contractor has a 4-year concrete mixer whose first cost was $6,000, having 3 more years to live before being scrapped and sold at $801. It
could now be sold for $11,922. It has an annual cost for operation and maintenance of $9,352. Its replacement is being proposed with a new
machine whose first cost will be $8,000 having a life of 9 years and salvage value $1,600. It has an operating cost of $800 per year and
maintenance cost of $320 per year. Ifthe interest is 20% cpd-a, what is the Annual Equivalent Cost of the Old Machine?
14,792
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