Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A small warehousing company is planning to buy a new forklift today to replace an existing one. The purchase price of the new forklift is
A small warehousing company is planning to buy a new forklift today to replace an existing one. The purchase price of the new forklift is $30,000. Each year the new forklift is operated, you will incur operating and maintenance (O&M) costs which are provided in the table below. The new forklift follows a declining balance depreciation model. The salvage values after the first year are estimated to be $22,500. The company uses a MARR of 10% for all financial analysis.
Please show all the work on EAC calculations.
A small warehousing company is planning to buy a new forklift today to replace an existing one. The purchase price of the new forklift is $30,000. Each year the new forklift is operated, you will incur operating and maintenance (O&M) cost which are provided in the table below. The new forklift follows a declining balance depreciation model. The salvage values after the first year is estimated to be $22,500. The company uses a MARR of 10% for all financial analysis. Year End O&M $3 000 $ 4 000 $5 620 $9 000 UD $13 000 A. Determine the depreciation rate of the forklift. B. What is the Economic Life of the forklift, and what is the minimum Equivalent Annual Cost (EAC)? Show ALL your calculations to justify your
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started