Merry Industries is considering a new piece of equipment for a project lasting 10 years with details as shown below. The costs and benefits are expected to keep increasing with the inflation rate even when a new machine is put into operation. Taking these into account, what is the annual worth that the company can expect from the machine?   Initial cost $65,000   MARR 12% p y c y   Inflation rate 3% p y c y   Life 7 years   Project life 10 years   Machine value today with life of 3 years $24,500   Machine value today with life of 7 years $13,500   First year costs $7,200 First year benefits $25,800

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Merry Industries is considering a new piece of equipment for a project lasting 10 years with details as shown below. The costs and benefits are expected to keep increasing with the inflation rate even when a new machine is put into operation. Taking these into account, what is the annual worth that the company can expect from the machine?

 

Initial cost $65,000

 

MARR 12% p y c y

 

Inflation rate 3% p y c y

 

Life 7 years

 

Project life 10 years

 

Machine value today with life of 3 years $24,500

 

Machine value today with life of 7 years $13,500

 

First year costs $7,200 First year benefits $25,800

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