The minimum equivalent uniform annual cost associated

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Reference no: EM132030373

ZZY Inc. is considering replacing a machine. These are the data for both the used and new machine. Used machine: the machine was purchased for $15323 two years ago, the current salvage value is $11758 and is expected to have a scrap value of $6110 whenever it is retired. This used machine still has 5 years left of service. From now on, the operating and Maintenance costs are $2469 for the first year and expected to increase by $1044 thereafter. New Machine: machine costs $13823 and is expected to have a scrap value of $8546 whenever it is retired. Operating and Maintenance costs are $1777 for the first year and expected to increase by $1122 thereafter. The service life of this machine is 4 years. If the MARR is 9%, determine the minimum equivalent uniform annual cost associated with the optimal economic life of the machine that offers the lowest EUAC.

Reference no: EM132030373

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