Problem 3 A piece of equipment is estimated to cost $86,000 new and to have a useful life of 5 years with a salvage value of $14,000. The company believes that a realistic MARR would be 10%. Taxes, insurance, and storage should amount to an additional 8%, which results in an overall cost of money of 10 + 8, or 18%. To recover ownership cost, what is the appropriate amount per hour that must be charged for the equipment usage if the expected
Problem 3 A piece of equipment is estimated to cost $86,000 new and to have a useful life of 5 years with a salvage value of $14,000. The company believes that a realistic MARR would be 10%. Taxes, insurance, and storage should amount to an additional 8%, which results in an overall cost of money of 10 + 8, or 18%. To recover ownership cost, what is the appropriate amount per hour that must be charged for the equipment usage if the expected
Chapter1: Making Economics Decisions
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![Problem 3
A piece of equipment is estimated to cost $86,000 new and to have a useful life of 5
years
with a salvage value of $14,000. The company believes that a realistic MARR would
be
10%. Taxes, insurance, and storage should amount to an additional 8%, which results
in
an overall cost of money of 10 + 8, or 18%. To recover ownership cost, what is the
appropriate amount per hour that must be charged for the equipment usage if the
expected
use rate of the equipment is 1,200 hours per year?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9c4f7ca3-11a8-4d7c-82b0-e0a5dbf2742b%2F1eec5252-bb1c-4146-b649-5d2a809b6fa4%2Fcv2oydm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 3
A piece of equipment is estimated to cost $86,000 new and to have a useful life of 5
years
with a salvage value of $14,000. The company believes that a realistic MARR would
be
10%. Taxes, insurance, and storage should amount to an additional 8%, which results
in
an overall cost of money of 10 + 8, or 18%. To recover ownership cost, what is the
appropriate amount per hour that must be charged for the equipment usage if the
expected
use rate of the equipment is 1,200 hours per year?
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