A manufacturing equipment costs $7800 and has no salvage value. Maintenance costs are expected to be SO for the first year but increases by $500 every year after that. Operating costs are expected to be $1400 every year machine will last 8 years and the interest rate is 10%, calculate the machine's economic life that minimizes the EUAC. only the following equations for the calculations to complete the table. AC of Capital recovery cost = 7800(A/P, 10%, t) AC of Maintenance costs 500 (A/G, 10%, t) mplete the following Table: Table of EUAC
A manufacturing equipment costs $7800 and has no salvage value. Maintenance costs are expected to be SO for the first year but increases by $500 every year after that. Operating costs are expected to be $1400 every year machine will last 8 years and the interest rate is 10%, calculate the machine's economic life that minimizes the EUAC. only the following equations for the calculations to complete the table. AC of Capital recovery cost = 7800(A/P, 10%, t) AC of Maintenance costs 500 (A/G, 10%, t) mplete the following Table: Table of EUAC
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:. A manufacturing equipment costs $7800 and has no salvage value. Maintenance costs are expected to be $0 for the first year but increases by $500 every year after that. Operating costs are expected to be $1400 every year. If the
machine will last 8 years and the interest rate is 10%, calculate the machine's economic life that minimizes the EUAC.
Use only the following equations for the calculations to complete the table.
EUAC of Capital recovery cost = 7800(A/P, 10%, t)
EUAC of Maintenance costs = 500 (A/G, 10%, t)
Complete the following Table:
1
2
3
4
5
6
7
8
Year
(t)
EUAC of
Operating
costs
$1400
$1400
$1400
$1400
$1400
$1400
$1400
$1400
Table of EUAC
EUAC of Capital
Recovery costs
EUAC of
Maintenance costs
EUAC Total
After completing the table:
1. Plot the EUAC of capital recovery, EUAC of Maintenance costs, EUAC of operating costs and Total EUAC vs Years.
2. Determine the economic life of the equipment by identifying the year at which the minimum total EUAC is obtained.
Submit a screen shot or the Excel spread sheet showing the Excel chart.
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