A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated. First cost, $ −840,000 Equipment replacement cost in year 2, $ −300,000 Annual operating cost, $/year −890,000 Salvage value, $ 250,000 Life, years 4 At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using tabulated factors. The equivalent annual cost of the project is $− .
A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated. First cost, $ −840,000 Equipment replacement cost in year 2, $ −300,000 Annual operating cost, $/year −890,000 Salvage value, $ 250,000 Life, years 4 At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using tabulated factors. The equivalent annual cost of the project is $− .
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A company that manufactures magnetic flow meters expects to undertake a project that will have the cash flows estimated.
|
First cost, $ |
−840,000 |
|
Equipment replacement cost in year 2, $ |
−300,000 |
|
Annual operating cost, $/year |
−890,000 |
|
Salvage value, $ |
250,000 |
|
Life, years |
4 |
At an interest rate of 10% per year, what is the equivalent annual cost of the project? Find the AW value using tabulated factors.
The equivalent annual cost of the project is $− .
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