Question
A piece of machinery costs $7500 and has no salvage value after it is installed. The manufacturer's warranty will pay the first year's maintenance and
A piece of machinery costs $7500 and has no salvage value after it is installed. The manufacturer's warranty will pay the first year's maintenance and repair costs. In the second year, maintenance costs will be $900, and this item will increase on a $900 arithmetic gradient in subsequent years. Also, operating expenses for the machinery will be $500 the first year and will increase on a $400 arithmetic gradient in the following years. If interest is 8%, compute the useful life of the machinery that results in a minimum EAC. (find its minimum cost life).
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