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would have no appreciable salvage value the end of the five-year period, determin the equivalent dollar savings per operatin hour at 9% interest compounded annual The equivalent net savings are $ per

would have no appreciable salvage value the end of the five-year period, determin the equivalent dollar savings per operatin hour at 9% interest compounded annual The equivalent net savings are $ per

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The General Mills Company (GMC) purchased a milling machine for $90,000, which it intends to use for the next five years. This machine is expected to save GMC $31,000 during the first operating year. Then the annual savings are expected to decrease by 2% each subsequent year over the previous year due to increased maintenance costs. Assuming that GMC would operate the machine for an average of 4,000 hours per year and that it would have no appreciable salvage value at the end of the five-year period, determine the equivalent dollar savings per operating hour at 9% interest compounded annually. The equivalent net savings are $ per operating hour.
Transcribed Image Text:The General Mills Company (GMC) purchased a milling machine for $90,000, which it intends to use for the next five years. This machine is expected to save GMC $31,000 during the first operating year. Then the annual savings are expected to decrease by 2% each subsequent year over the previous year due to increased maintenance costs. Assuming that GMC would operate the machine for an average of 4,000 hours per year and that it would have no appreciable salvage value at the end of the five-year period, determine the equivalent dollar savings per operating hour at 9% interest compounded annually. The equivalent net savings are $ per operating hour.
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