Find what is the economic life of the machine

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Reference no: EM132771074

Problem 1: A new machine will cost $250,000. The expected market value of the machine at the end of each year, and the annual maintenance costs are given in the table below. Assuming 11% cost of capital, what is the economic life of the machine? Clearly answer the question.

Year    Market Value at the End             Annual Maintenance Cost
0    250,000
1    223,000                                   27,000
2    200,000                                 27,000
3 180,000 28,000
4 162,000                                30,000
5                    145,000                             34,000
6                      132,000 42,000
7                      122,000    58,000
8 113,000                           90,000

Reference no: EM132771074

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