The capital investment for a new machine is $960,000. The estimated annual cost at the end of the first year is $97,800. This cost is expected to increase at a rate of 6.2% per year for seven years. This machine will generate an income of $125,500 per year. Assuming inflation rate (f) is equal to 5% and the MARR (real) is 10% per year. What should be the market value (MV) of the machine at the end of the seventh year to justify selection of this machine?

The capital investment for a new machine is $960,000. The estimated annual cost at the end of the first year is $97,800. This cost is expected to increase at a rate of 6.2% per year for seven years. This machine will generate an income of $125,500 per year. Assuming inflation rate (f) is equal to 5% and the MARR (real) is 10% per year. What should be the market value (MV) of the machine at the end of the seventh year to justify selection of this machine?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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