Question
Olivia's Storage Co. is considering a new storage container system that would reduce operating expenses by $0.075 per square-feet of space if implemented. Currently Olivia's
Olivia's Storage Co. is considering a new storage container system that would reduce operating expenses by $0.075 per square-feet of space if implemented. Currently Olivia's manages about 90,000 square-feet of space per year. The system will cost $35,000 to install. The annual maintenance costs will be zero in the first year but will increase by $100 each year thereafter. The system will have a salvage value of $7,500 after its project life of eight years. Olivia's uses an MARR of 18%. What is the equivalent uniform annual worth (EUAW) for this system? Based on this analysis, what is your recommendation to Olivia's on this purchase?
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