Griffin Dewatering purchases a wellpoint pump connected to a skid-mounted diesel engine for $14,000. Its market value for salvage purposes decreases 30% each year. When installed on a construction job, a wellpoint system operates virtually 24/7, and operating and maintenance costs will be $3,500 the first year, increasing $600 each year thereafter. What is the optimum replacement interval if MARR is 15%?

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A:

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.