13)(Ch10) You are planning for the purchase of a new piece of equipment for your plant that will cost $12,000 (including installation). You have been provided with the following estimates of the salvage values if sold at various years. Maintenance

costs are expected to increase each year. Salvage value and Maintenance Costs are assumed to occur at year-end. The firms interest rate is 9%.

year	salvage value(including Removal costs)	Maintenance cost
1	$8,500	$600
2	$7,200	$850
3	$5,300	$1,200
4	$3,500	$1,700
5	$1,000	$2,350
6	$-1000	$2,600

(a) Determine the equivalent annual cost if the equipment is kept for 1 year, 2 years,

3 years, 4 years, 5 years or 6 years.

(b) What is the economic life of the equipment?

Note: This question is from Engineering Economy and Decision Making by Ted G. Eschenbach (3rd edition). ( chapter 10) . (ISBN-13: 9780199772766; ISBN-10: 019977276) . Please use the sample examples from that chapter to solve it.