You are considering investing RM64000 in new equipment. You estimate that the net cash flows will be RM14000 during the first year, but will increase by RM2500 per year the next year and each year thereafter. The equipment is estimated to have a 7-year service life and a net salvage value of RM5300 at that time. Assume MARR of 9%.
You are considering investing RM64000 in new equipment. You estimate that the net cash flows will be RM14000 during the first year, but will increase by RM2500 per year the next year and each year thereafter. The equipment is estimated to have a 7-year service life and a net salvage value of RM5300 at that time. Assume MARR of 9%.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![You are considering investing RM64000 in new
equipment. You estimate that the net cash flows
will be RM14000 during the first year, but will
increase by RM2500 per year the next year and
each year thereafter. The equipment is
estimated to have a 7-year service life and a net
salvage value of RM5300 at that time. Assume
MARR of 9%.
a.Calculate the annual capital cost CR (ownership cost)
for the equipment.
Format : 87348
b.Determine the equivalent annual savings.
Format: 60952
c.Is this a wise investment? Y/N.
Format: A](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F851c5363-3281-4f83-bdff-950f94d5ead9%2F95db08eb-0c27-4509-922d-9aca9ef5c512%2Fkmf2xn8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:You are considering investing RM64000 in new
equipment. You estimate that the net cash flows
will be RM14000 during the first year, but will
increase by RM2500 per year the next year and
each year thereafter. The equipment is
estimated to have a 7-year service life and a net
salvage value of RM5300 at that time. Assume
MARR of 9%.
a.Calculate the annual capital cost CR (ownership cost)
for the equipment.
Format : 87348
b.Determine the equivalent annual savings.
Format: 60952
c.Is this a wise investment? Y/N.
Format: A
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