Costs more to operate than anticipated

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Reference no: EM131875271

GIVEN: A machine purchased 1 year ago for $85000 costs more to operate than anticipated. When purchased, the machine was expected to be used for 10 years with annual maintenance costs of $22000 and a $10000 salvage value. However, last year, it cost the company $35000 to maintain it, and these costs are expected to escalate to $36000 this year and increase by $1500 each year thereafter. The market value is now estimated to be $85000-10000k where k is the number of years since the machine was purchase. It is now estimated that this machine will be useful for will be useful for a maximum of 5 more years. A replacement study is performed now. FIND: Determine the values of P, n, AOC, and S of this defender.

Reference no: EM131875271

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