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 6, Problem 14P
To determine

Calculate the annual cost.

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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?
Operating and repair costs for equipment will be $15,000 per year for a 3-year warranty period, which required an initial investment of $300,000. Beginning in year 4, costs will climb at a rate of $2,500 per year. The equipment will bring $55,000 in income to the business, but starting after year 2. The equipment will be retired after year 10, with a salvage value of $30,000. Find the present worth of these costs if the firm’s interest rate is 12%. What is the annual cost of ownership?
What is the equivalent annual maintenance cost over the infinite servicelife?
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