Determine the economic service life of the sifter

Reference no: EM131005865

A construction company bought a 180,000 metric ton earth sifter at a cost of $65,000. The company expects to keep the equipment a maximum of 7 years. The operating cost is expected to follow the series described by 40,000 + 10,000k, where k is the number of years since it was purchased (k = 1 through 7). The salvage value is estimated to be $30,000 for years 1 and 2 and $20,000 for years 3 through 7. At i = 10% per year, determine the eco- nomic service life of the sifter and the associated annual worth.

Reference no: EM131005865

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