Question 8 Canada's Wonderland has decided to carry out an analysis to determine when one of its roller coasters should be replaced. The existing roller coaster was purchased 25 years ago for $715,000. The costs of operating and maintaining this ride for a 5-year study period are predicted to be $70,000 in year 1 and would increase by $1,300 each year thereafter (i.e. $71,300 in year 2, $72,600 in year 3, etc.) Canada's Wonderland uses a MARR of 10% for roller coaster projects. (a) If the roller coaster loses value at a rate of 7% per year, what is the salvage value at the end of the study period? (b) What is the EAC for operating & maintenance costs (O&M) after 4 years in the study period? (c) Supposing the salvage value after 2 years in the study period is $100,773, what is the EAC for capital costs after 2 years in the study period? . (d) What is the economic remaining life of the roller coaster (i.e. in the study period)?
Question 8
Canada's Wonderland has decided to carry out an analysis to determine when one of its roller coasters should be replaced. The existing roller coaster was purchased 25 years ago for $715,000. The costs of operating and maintaining this ride for a 5-year study period are predicted to be $70,000 in year 1 and would increase by $1,300 each year thereafter (i.e. $71,300 in year 2, $72,600 in year 3, etc.) Canada's Wonderland uses a MARR of 10% for roller coaster projects. (a) If the roller coaster loses value at a rate of 7% per year, what is the salvage value at the end of the study period? (b) What is the EAC for operating & maintenance costs (O&M) after 4 years in the study period? (c) Supposing the salvage value after 2 years in the study period is $100,773, what is the EAC for capital costs after 2 years in the study period? . (d) What is the economic remaining life of the roller coaster (i.e. in the study period)?
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