A $20,000 machine will be purchased by a company with an MARR of 10%. It will cost $5,000 to install and removal costs are insignificant. What is its economic life and minimum EUAC cost given the following O&M costs: Their is on salvage value including in the problem YR, n O&M 2 3 4 $5,000 $8,000 $11,000 $14,000 $17,000

A $20,000 machine will be purchased by a company with an MARR of 10%. It will cost $5,000 to install and removal costs are insignificant. What is its economic life and minimum EUAC cost given the following O&M costs: Their is on salvage value including in the problem YR, n O&M 2 3 4 $5,000 $8,000 $11,000 $14,000 $17,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A firm is considering the purchase of a new machine to increase the output of an existing production process. If each of these machines provides the same service over their useful lives and the MARR is 15%, Initial Investment Annual Cost Market Value at Alternative A $14,000 $14,000 $8,000 Alternative B $65,000 $9,000 $13,000 End of Useful Life Useful Life a) Which machine would be selected on the basis gf teBratabilitx, assumption? b) Using co-terminated assumption with a 5.year study period (compute imputed market value for alternative B), which alternative is preferred? c) If perpetual service life is assumed, which of these alternatives do you recommend? 5 years 20 years
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Giving the following information on machine A and machine B and assuming an 8.6% MARR, which mutually exclusive alternative should be selected?
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