Determine the economic service life of the asset

Reference no: EM131928400

Problem

A new asset is available now for $140,000. Operating and maintenance costs are $20,000 each year for the first five years, $22,000 in year six, $25,000 in year seven, and $28,000 in year eight. Salvage values are estimated to be $130,000 after one year and will decrease at the rate of 5% per year thereafter. If MARR is 12%, determine the economic service life of the asset.

Reference no: EM131928400

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