Question
MARR = 9.00% This machine has a 9 year economic service life after which it will have a $13,098 salvage value. The operating costs for
MARR = 9.00% This machine has a 9 year economic service life after which it will have a $13,098 salvage value. The operating costs for this machine are expected to be $6,433 for the first year, increasing by $640/year for each year thereafter (for example, $6,433 for year 1, $7,073 for year 2, $7,713 for year 3, etc). At what market value of the existing machine would make the proposed machine equally economically attractive? A manufacturing machine was purchased 10 years ago for $158,000. The machine has a useful life of just 4 more years, at which time it will have no salvage value. The operating costs of this machine are expected to be $12,750 this year and increasing by $3,245 each year thereafter (for example, $12,750 for year 1, $15,995 for year 2, $19,240 for year 3, etc). A proposal has been made to purchase a new machine for $85,118
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