A machine has an investment cost of $50000. It costs 20000 for shipping, insurance and site preparation. The operation and maintenance expense is $500 for the first year and then keep on increasing at the rate of $50 per year. Additionally, the hourly fuel expenses for running the machine is $10 per hour and the machine is expected to operate 4000 hour each year. The cost of dismantling and disposing of the machine at the end of 10 year life is $10000. If the interest rate is 15 % per year, what is the annual equivalent life cycle cost of the machine? (Can anyone solve this?
A machine has an investment cost of $50000. It costs 20000 for shipping, insurance and site preparation. The operation and maintenance expense is $500 for the first year and then keep on increasing at the rate of $50 per year. Additionally, the hourly fuel expenses for running the machine is $10 per hour and the machine is expected to operate 4000 hour each year. The cost of dismantling and disposing of the machine at the end of 10 year life is $10000. If the interest rate is 15 % per year, what is the annual equivalent life cycle cost of the machine? (Can anyone solve this?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 10P
Related questions
Question
A machine has an investment cost of $50000. It costs 20000 for shipping, insurance and site preparation. The operation and maintenance expense is $500 for the first year and then keep on increasing at the rate of $50 per year. Additionally, the hourly fuel expenses for running the machine is $10 per hour and the machine is expected to operate 4000 hour each year. The cost of dismantling and disposing of the machine at the end of 10 year life is $10000. If the interest rate is 15 % per year, what is the annual equivalent life cycle cost of the machine?
(Can anyone solve this?)
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