A piece of equipment has a first cost of $160,000, a maximum useful life of 7 years, and a market (salvage) value described by the relation S 120,000 - 9,000k, where k is the number of years since it was purchased. The salvage value cannot go below zero. The AOC series is estimated using AOC = 60,000+ 6,000k. The interest rate is 9% per year. Determine the economic service life and the respective AW. The economic service life is year(s) and the AW value is $
A piece of equipment has a first cost of $160,000, a maximum useful life of 7 years, and a market (salvage) value described by the relation S 120,000 - 9,000k, where k is the number of years since it was purchased. The salvage value cannot go below zero. The AOC series is estimated using AOC = 60,000+ 6,000k. The interest rate is 9% per year. Determine the economic service life and the respective AW. The economic service life is year(s) and the AW value is $
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Question
![A piece of equipment has a first cost of $160,000, a maximum useful life of 7 years, and a market (salvage) value described by the
relation S 120,000 - 9,000k, where k is the number of years since it was purchased. The salvage value cannot go below zero. The
AOC series is estimated using AOC = 60,000+ 6,000k. The interest rate is 9% per year. Determine the economic service life and the
respective AW.
The economic service life is
year(s) and the AW value is $](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2cd4872e-5aac-49f1-9024-5288d483d124%2Ff243476b-e190-4145-abca-abd11d028779%2Fr6db3pd_processed.png&w=3840&q=75)
Transcribed Image Text:A piece of equipment has a first cost of $160,000, a maximum useful life of 7 years, and a market (salvage) value described by the
relation S 120,000 - 9,000k, where k is the number of years since it was purchased. The salvage value cannot go below zero. The
AOC series is estimated using AOC = 60,000+ 6,000k. The interest rate is 9% per year. Determine the economic service life and the
respective AW.
The economic service life is
year(s) and the AW value is $
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