You are evaluating for acquisition an equipment tha should reduce your annual operating expenses in $5000 and has an estimated salvage value of $500 after it's 10 years useful life. If the value of money for your company is represented by a MARR of

You are evaluating for acquisition an equipment tha should reduce your annual operating expenses in $5000 and has an estimated salvage value of $500 after it's 10 years useful life. If the value of money for your company is represented by a MARR of

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Answer it ASAP I will like you

You are evaluating for acquisition an equipment that
should reduce your annual operating expenses in
$5000 and has an estimated salvage value of $500
after it's 10 years useful life. If the value of money
for your company is represented by a MARR of
10%, How much such you be willing to pay for that
equipment now, assuming you will use it for the 10
years useful life?

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Step 1: Define MARR

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Step 2: Determine the present value for each year

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Step 3: Calculate the present salvage value and then initial investment value

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