Question
Warehouse A with a life of 10 years can be constructed now for $100,000 with no repair costs and a salvage value of $10,000. Alternatively,
Warehouse A with a life of 10 years can be constructed now for $100,000 with no repair costs and a salvage value of $10,000. Alternatively,
Warehouse B with a life of 12 years can be constructed for $70,000 now with a salvage value of $5000, but requires $18,000 worth of repairs every 3 years.
Both have equal usefulness and are needed indefinitely.
Assuming the cost of money is 6%, which warehouse is a better deal and by most nearly how much per year?
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Engineering economy
Authors: Leland Blank, Anthony Tarquin
7th Edition
9781259027406, 0073376302, 1259027406, 978-0073376301
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