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Suppose a company has a forklift but is considering purchasing a new electric lift truck that would cost $230,000 and has operating cost of $25,000
Suppose a company has a forklift but is considering purchasing a new electric lift truck that would cost $230,000 and has operating cost of $25,000 in the first year. For the remaining years, operating costs increase each year by 5% over the previous years operating costs. It loses 15% of its value every year from the previous years salvage value. The lift truck has a maximum life of 4 years. The firms required rate of return is 5%. Find the economic service life of this new machine.
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