A 2-ton hydraulic press is needed to add to production. This equipment has an initial purchase and installation cost of $190,000. In addition, it has yearly operation costs of $1000 and maintenance cos of $1500. Each year we expect an additional $32,000 in revenue resulting from this purchase. The press is expected to have a salvage value of $20,000 at the end of its 10-year lifetime. Using an interes rate of 12%, what is the annual equivalent (AE) for the purchase of this equipment over its lifetime? If there is an annual loss enter the value as negative and if there is an annual profit enter the value as positive.

A 2-ton hydraulic press is needed to add to production. This equipment has an initial purchase and installation cost of $190,000. In addition, it has yearly operation costs of $1000 and maintenance cos of $1500. Each year we expect an additional $32,000 in revenue resulting from this purchase. The press is expected to have a salvage value of $20,000 at the end of its 10-year lifetime. Using an interes rate of 12%, what is the annual equivalent (AE) for the purchase of this equipment over its lifetime? If there is an annual loss enter the value as negative and if there is an annual profit enter the value as positive.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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