Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 15, Problem 12P

a:

To determine

Calculate the present worth.

b:

To determine

Calculate the new present worth.

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The initial cost of a pickup truck is $12,748 and will have a salvage value of $4,360 after five years. Maintenance is estimated to be a uniform gradient amount of $121 per year, with zero dollar for first year maintenance. The operation cost is estimated to be $0.3 per mile for 351 miles per month. If the interest rate is 12%, what is the annual equivalent cost (AEC) for the truck?
Your firm has purchased an injection molding machine at a cost of $100,000. The machine's useful life is estimated at 8 years. Your accounting department has estimated the capital cost for this machine at about $25,455 per year. If your firm's minimum acceptable rate of return is 20%, how much salvage value did the accounting department assume at the end of 8 years? Use Capital Recovery method.
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