Determine the economic service life and corresponding aw

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A new gear grinding machine for composite materials has a first cost of P=$100,000 and can be used for a maximum of 3 years. Its salvage value is estimated by the relation S=P(0.85)n, where n is the number of years after purchase. The operating cost will be $75,000 the first year and will increase by $10,000 per year thereafter. Use i=18% per year to determine the economic service life and corresponding AW.

Reference no: EM13184915

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