Annual worth of machine at its optimal economic service life

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Reference no: EM131562721

The initial cost of a certain machine is $60,000. Due to the intended service use, its market value drops 20% of its prior year's value in Years 1 and 2 and then declines by 15% from year until the end of its life. Maintenance costs of the machine are $2,000 per year during Years 1 and 2, while the warranty is in place. In Year 3 it jumps to $7,500 and increases $2,000 per year thereafter. If the interest rate is 12% per year, what is the Annual Worth of the machine at its optimal economic service life?

Reference no: EM131562721

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