Question
please help me with this: Novelis, a subsidiary of Alcan, produces aluminum foil for household use. Their plant purchased a set of working rollers, for
please help me with this:
Novelis, a subsidiary of Alcan, produces aluminum foil for household use. Their plant purchased a set of working rollers, for thinning the processed aluminum, 15 years ago for $6 million dollars. The Operations Project Manager has decided to conduct an analysis to determine when the equipment should be replaced. The Project Manager has predicted the O&M costs for the next 6 years. Novelis uses a MARR of 15% for operations projects and estimates the Operating and Maintenance costs to be $355,000 in year 1, increasing by $ 19,000/year for the remainder of the study.
a) Assuming a declining-balance depreciation model and a depreciation rate of 11%, calculate the salvage value of the working rollers for each year, 0 to 6, of the study period.
b) Find the economic life and minimum EAC for the existing working rollers.
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