Rodeo Jeans are stonewashed under a contract with independent USA Denim Company. USA Denim purchased 2 semiautomatic

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Rodeo Jeans are stonewashed under a contract with independent USA Denim Company. USA Denim purchased 2 semiautomatic machines that cost \($19\),000 each at (t = 0). Annual operating and maintenance costs are \($15\),000 per machine. Two years after purchasing the machines, USA Denim made them fully automatic at a cost of \($12\),000 per machine. In the fully automatic mode, the operating and maintenance costs are \$6\),000 the first year, increasing by \($1\),000 each year there after. The contract with Rodeo Company is for 8 years. Draw the cash flow diagram for all of USA Denim’s investment and other costs assuming the contract will not be extended beyond 8 years.

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Principles Of Engineering Economic Analysis

ISBN: 9781118163832

6th Edition

Authors: John A. White, Kenneth E. Case, David B. Pratt

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