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A company is considering a new piece of equipment for a project lasting 10 years with details as shown below. The costs and benefits
A company is considering a new piece of equipment for a project lasting 10 years with details as shown below. The costs and benefits are expected to keep increasing with the inflation rate even when a new machine is put into operation. Taking these into account, what is the annual worth that the company can expect from the machine? Initial cost MARR $145,000 18%p y cy Inflation rate 4%p y cy Life 7years Project life 10years Machine value today with life of 3 $64,500 years Machine value today with life of 7 $33,500 years First year costs $62,200 First year benefits $96,800 $2,969 $985 $1,779 $3,260
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