A loader is being considered to tram material from a stockpile. The cost of the machine is estimated at $1,400,000 with an estimated salvage value of $425,000 at the end of year seven. Operating costs are estimated to be $320,000 annually with major repairs of $250,000 and $300,000 required at the end of years 3 and 5, respectively. Given the required tram distance, the machine can move 2,900 tons of material daily, 250 days per year. For a desire minimum rate of return of 12%, calculate the present worth cost and the equivalent annual cost of operating the machine over the next seven years. Finally, calculate the breakeven cost per ton of material being trammed.

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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A loader is being considered to tram material from a stockpile. The cost of the machine is
estimated at $1,400,000 with an estimated salvage value of $425,000 at the end of year
seven. Operating costs are estimated to be $320,000 annually with major repairs of
$250,000 and $300,000 required at the end of years 3 and 5, respectively. Given the
required tram distance, the machine can move 2,900 tons of material daily, 250 days per
year. For a desire minimum rate of return of 12%, calculate the present worth cost and the
equivalent annual cost of operating the machine over the next seven years. Finally,
calculate the breakeven cost per ton of material being trammed.
Transcribed Image Text:A loader is being considered to tram material from a stockpile. The cost of the machine is estimated at $1,400,000 with an estimated salvage value of $425,000 at the end of year seven. Operating costs are estimated to be $320,000 annually with major repairs of $250,000 and $300,000 required at the end of years 3 and 5, respectively. Given the required tram distance, the machine can move 2,900 tons of material daily, 250 days per year. For a desire minimum rate of return of 12%, calculate the present worth cost and the equivalent annual cost of operating the machine over the next seven years. Finally, calculate the breakeven cost per ton of material being trammed.
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