The plant manager has asked you to do a cost analysis to determine when currently owned equipment should be replaced. The manager stated that under no circumstances will the existing equipment be retained longer than two more years and that once it is replaced, a contractor will provide the same service from then on at a cost of $97,000 per year. The salvage value of the currently owned equipment is estimated to be $37,000 now, $30,000 in 1 year, and $19,000 two years from now. The operating cost is expected to be $85,000 per year. Using an interest rate of 10% per year, determine when the defending equipment should be retired
The plant manager has asked you to do a cost analysis to determine when currently owned equipment should be replaced. The manager stated that under no circumstances will the existing equipment be retained longer than two more years and that once it is replaced, a contractor will provide the same service from then on at a cost of $97,000 per year. The salvage value of the currently owned equipment is estimated to be $37,000 now, $30,000 in 1 year, and $19,000 two years from now. The operating cost is expected to be $85,000 per year. Using an interest rate of 10% per year, determine when the defending equipment should be retired
Chapter2: Loads On Structures
Section: Chapter Questions
Problem 1P
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The plant manager has asked you to do a cost analysis
to determine when currently owned equipment
should be replaced. The manager stated that
under no circumstances will the existing equipment
be retained longer than two more years and
that once it is replaced, a contractor will provide
the same service from then on at a cost of $97,000
per year. The salvage value of the currently owned
equipment is estimated to be $37,000 now, $30,000
in 1 year, and $19,000 two years from now. The
operating cost is expected to be $85,000 per year.
Using an interest rate of 10% per year, determine
when the defending equipment should be retired
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