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 $874. It could now be sold for $11,438. It has an annual cost for operation and maintenance of $8,444. 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. If the interest is 23% 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 $874. It could now be sold for $11,438. It has an annual cost for operation and maintenance of $8,444. 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. If the interest is 23% cpd-a, what is the Annual Equivalent Cost of the Old Machine?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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