A piece of equipment has a first cost of $135000, a maximum useful life of 7 years, and a market (salvage) value described by the relation S = 120,000 - 21000k, where k is the number of years since it was purchased. The salvage value cannot go below zero. The AOC series is estimated using AOC = 60,000 + 11000k. The interest rate is 12.00% per year. Determine the economic service life and the respective AW. The economic service life is year(s) and the AW value is $
A piece of equipment has a first cost of $135000, a maximum useful life of 7 years, and a market (salvage) value described by the relation S = 120,000 - 21000k, where k is the number of years since it was purchased. The salvage value cannot go below zero. The AOC series is estimated using AOC = 60,000 + 11000k. The interest rate is 12.00% per year. Determine the economic service life and the respective AW. The economic service life is year(s) and the AW value is $
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 2E
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![A piece of equipment has a first cost of $135000, a maximum useful life of 7 years, and a market (salvage) value described by the
relation S = 120,000 - 21000k, where k is the number of years since it was purchased. The salvage value cannot go below zero. The
AOC series is estimated using AOC = 60,000 + 11000k. The interest rate is 12.00% per year. Determine the economic service life and
the respective AW.
The economic service life is
year(s) and the AW value is $](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb2f5b0ad-df1d-48c6-a9a3-5338b8167143%2F44c3564d-ebbc-40c8-b6de-227957a38c69%2F7ytol0p_processed.png&w=3840&q=75)
Transcribed Image Text:A piece of equipment has a first cost of $135000, a maximum useful life of 7 years, and a market (salvage) value described by the
relation S = 120,000 - 21000k, where k is the number of years since it was purchased. The salvage value cannot go below zero. The
AOC series is estimated using AOC = 60,000 + 11000k. The interest rate is 12.00% per year. Determine the economic service life and
the respective AW.
The economic service life is
year(s) and the AW value is $
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