A large standby electricity generator in a hospital operating room has a first cost of $64,250 and may be used for a maximum of 6 years. Its salvage value, which decreases by 15% per year, is described by the equation S = 64,250(1 − 0.15)n, where n is the number of years after purchase. The operating cost of the generator will be constant at $6,000 per year, and the interest rate is 12% per year. Determine the economic service life and associated AW values.
A large standby electricity generator in a hospital operating room has a first cost of $64,250 and may be used for a maximum of 6 years. Its salvage value, which decreases by 15% per year, is described by the equation S = 64,250(1 − 0.15)n, where n is the number of years after purchase. The operating cost of the generator will be constant at $6,000 per year, and the interest rate is 12% per year. Determine the economic service life and associated AW values.
Chapter1: Making Economics Decisions
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A large standby electricity generator in a hospital operating room has a first cost of $64,250 and may be used for a maximum of 6 years. Its salvage value, which decreases by 15% per year, is described by the equation S = 64,250(1 − 0.15)n, where n is the number of years after purchase. The operating cost of the generator will be constant at $6,000 per year, and the interest rate is 12% per year. Determine the economic service life and associated AW values.
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