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Your company is looking at replacing an old piece of equipment with a new one that will cost $75,000 dollars. You plan on selling the
Your company is looking at replacing an old piece of equipment with a new one that will cost $75,000 dollars. You plan on selling the new equipment at the end of 5 years for $40,000. In the 1st year, the equipment saves you $2000 in energy costs compared to the old equipment, but due to rising energy costs and aging of the equipment, each year you own it, it saves $200 less than the previous year. Each year it costs you $1200 in maintenance costs. The revenue from the equipment is $10,000 per year. Assume i = 4%. a. What is the net present value of the equipment? What is the equivalent annual cost of the equipment
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