Computing the equivalent uniform annual cost

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Question: Machine A was purchased three years ago for $10,000 and had an estimated market value of $1,000 at the end of its 10-year life. Annual operating costs are $1,000. The machine will perform satisfactorily for the next seven years. A salesman for another company is offering Machine B for $50,000 with an market value of $5,000 after 10 years. Annual operating costs will be $600. Machine A could be sold now for $7,000, and MARR is 9% per year. Using the outsider viewpoint, what is the difference in the equivalent uniform annual cost (EUAC) of buying Machine B compared to continuing to use Machine A: i.e., EUAC(Machine B) - EUAC(Machine A). (Do not enter the dollar sign $ with your answer.)

Reference no: EM131794205

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