Determine equivalent annual cost

Reference no: EM1368478

A certain machine costs $25,000 to purchase and install. It has salvage values and operating costs as shown in the table in the attached file. The salvage value of $20,000 listed at time 0 reflects the loss of the installation costs at the time of installation. The MARR is 12%.

Life in Years Salvage value Operating cost
0 $20,000.00
1 16000.00 $3,000.00
2 12800.00 3225.00
3 10240.00 3466.88
4 8192.00 3726.89
5 6553.60 4006.41
6 5242.88 4306.89
7 4194.30 4629.90
8 3355.44 4977.15
9 2684.35 5350.43
10 2147.48 5751.72
11 1717.99 6183.09
12 1374.39 6646.83
13 1099.51 7145.34
14 879.61 7681.24
15 703.69 8257.33
16 562.95 8876.63
17 450.36 9542.38
18 360.29 10258.06

a) What is the economic life of the machine?
b) What is the equivalent annual cost over that life?

Now assume that the MARR is 5%.
c) What is the economic life of the machine?
d) What is the equivalent annual cost over that life?
e) Explain the effect of decreasing the MARR.

Reference no: EM1368478

Questions Cloud

Write program to accept name and score of all batsmen : Write a program to accept name and score of all batsmen of a team and print them in the given manner: INPUT:names[]={nam1,nam2,nam3,nam4,nam5,nam6} & scores[]={48,65,73,10,90,84}

How capital investment affect the marginal product of labor : How does capital investment affect the marginal physical product of labor and does more college education have the same kind of effect also which is a better investment

Explain an effort that you organization has undertaken : Explain an effort that you organization has undertaken to invest in technology and How was the decision made and Who was involved in the decision making?

Write method multiple to determine for pair of integers : Write a method multiple which determines, for pair of integers, whether second integer is a multiple of first. The method must take two integer arguments

Determine equivalent annual cost : A certain machine expenses $25,000 to purchase and install. It has salvage values and operating costs as demonstrate in the table in the attached file. The salvage value of $20,000 listed at time 0 reflects the loss of installation costs at the time..

Explain including and the standard elements of a contract : Explain including the above list and the standard elements of a contract and you are to also include the following clauses into your formal

Calculating marginal cost : If the demand elasticity for a product is -2, and a profit-maximizing company sells the product for $10, determine its marginal cost?

Construct a model of irrational behavior : Economists are often criticized for making assumptions. Explain why are assumptions necessary? To think about this, you might consider an assumption that is often made,

Implementation plan for word processing software application : Word processing software application. Boardman plans to hire Smith Systems Consulting to help them analyze their options and to create the implementation plan.

User Account

All Pages