Associated equivalent annual cost of the machine

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A company bought a machine at a cost of $75,000. The company expects to keep the machine a maximum of 5 years. The operating cost is expected to follow the series described by 45,000+10,000k, where k is the number of years since it was purchased (k-1,2,...5). The salvage value is estimated to be $35,000 for years 1 and 2 and $20,000 for years 3 through 5. At an interest rate of 10% per year, determine the economic service life and the associated equivalent annual cost of the machine.

Reference no: EM132063963

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