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A company is considering purchasing a machine for manufacturing that costs $30,000. The salvage value and O&M costs for the next 7 years is given in the following table. The Equivalent Uniform Annual Cost (EUAC) is computed for each year assuming the equipment was sold at the end of that year and a MARR of 6%.  What is the optimal economic life of the machine? Yr   Salvage Value   O&M Costs    EUAC      1 $15,000 $1,200  $18,000 2 $14,400 $2,100  $11,909 3 $13,800 $3,000  $10,753 4 $13,200 $3,900  $10.825 5 $12,600 $4,800  $11,382 6 $12,000 $5,700  $12,178 7 $11,400 $6,600  $13,106

A company is considering purchasing a machine for manufacturing that costs $30,000. The salvage value and O&M costs for the next 7 years is given in the following table. The Equivalent Uniform Annual Cost (EUAC) is computed for each year assuming the equipment was sold at the end of that year and a MARR of 6%.  What is the optimal economic life of the machine? Yr   Salvage Value   O&M Costs    EUAC      1 $15,000 $1,200  $18,000 2 $14,400 $2,100  $11,909 3 $13,800 $3,000  $10,753 4 $13,200 $3,900  $10.825 5 $12,600 $4,800  $11,382 6 $12,000 $5,700  $12,178 7 $11,400 $6,600  $13,106

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter21: Costs And The Supply Of Goods
Section: Chapter Questions
Problem 17CQ
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A company is considering purchasing a machine for manufacturing that costs $30,000. The salvage value and O&M costs for the next 7 years is given in the following table. The Equivalent Uniform Annual Cost (EUAC) is computed for each year assuming the equipment was sold at the end of that year and a MARR of 6%.  What is the optimal economic life of the machine?

Yr   Salvage Value   O&M Costs    EUAC     
1 $15,000 $1,200  $18,000
2 $14,400 $2,100  $11,909
3 $13,800 $3,000  $10,753
4 $13,200 $3,900  $10.825
5 $12,600 $4,800  $11,382
6 $12,000 $5,700  $12,178
7 $11,400 $6,600  $13,106
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