What is the optimum economic life for this machine

Reference no: EM132195878

Question - A machine is purchased for $150,000. The machine is expected to operate 2000 hours in first year. Operating hours then will decrease by 100 each year. The salvage value of the machine will decrease by 15% each year. Other owing costs will be $12500 in year 1 and will then decrease by 10% each year. All operating costs will total $6500 in the first year and will increase by 12% each year. What is the optimum "economic" life for this machine and what is the corresponding hourly O & O cost?

Reference no: EM132195878

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