| Question |
The plant manager has just purchased a piece of unusual machinery for $10,000. Its resale value at the end of 1 year is estimated to be $3000, because the device is sought by antique collectors, resale value is rising at the rate of $500 per year. The maintenance cost is expected to be $300 per year for each of the first 3 years, and then it is expected to double each year after that. Thus the fourth-year maintenance will be $600; the fifth-year maintenance, $1200, and so on. Based on a 15% before-tax MARR, what life of this machinery has the lowest EUAC? |
