Determine the number of down-days per year

Reference no: EM13209557

A plant is considering buying a second-hand machine to use as stand-by equipment. The machine costs $3,000 and has an economic life of 10 years, at which time its salvage value is $600; expected annual operating costs are $100. Without a stand-by machine, the plant would have to shut down for a certain number of days at a cost of $50 per day. Use an after-tax MARR of 10% and straight-line depreciation. The company's tax rate is 52%. Determine the number of down-days per year that would justify the acquisition of the stand-by machine.

Reference no: EM13209557

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