A contractor has a 4-year concrete mixer whose first cost was $6,000, having 3 more years to live before being scrapped and sold at $874. It could now be sold for $11,438. It has an annual cost for operation and maintenance of $8,444. Its replacement is being proposed with a new machine whose first cost will be $8,000 having a life of 9 years and salvage value $1,600. It has an operating cost of $800 per year and maintenance cost of $320 per year. If the interest is 23% cpd-a, what is the Annual Equivalent Cost of the Old Machine?
A contractor has a 4-year concrete mixer whose first cost was $6,000, having 3 more years to live before being scrapped and sold at $874. It could now be sold for $11,438. It has an annual cost for operation and maintenance of $8,444. Its replacement is being proposed with a new machine whose first cost will be $8,000 having a life of 9 years and salvage value $1,600. It has an operating cost of $800 per year and maintenance cost of $320 per year. If the interest is 23% cpd-a, what is the Annual Equivalent Cost of the Old Machine?
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter12: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 10P: Dauten is offered a replacement machine which has a cost of 8,000, an estimated useful life of 6...
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A contractor has a 4-year concrete mixer whose first cost was $6,000, having 3 more years to live before being scrapped and sold at $874. It could now be sold for $11,438. It has an annual cost for operation and maintenance of $8,444. Its replacement is being proposed with a new machine whose first cost will be $8,000 having a life of 9 years and salvage value $1,600. It has an operating cost of $800 per year and maintenance cost of $320 per year. If the interest is 23% cpd-a, what is the Annual Equivalent Cost of the Old Machine?
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