Find economic service life of new machine

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Reference no: EM131911733

Suppose a company has a forklift but is considering purchasing a new electric lift truck that would cost $180000 and has operating cost of $30000 in the first year. For the remaining years, operating costs increase each year by 26% over the previous year's operating costs. It loses 25% of its value every year fromthe previous year's salvage value. The lift truck has a maximum life of 6 years. The firm's required rate of return is 4%. Find economic service life of this new machine. Explain your answer.

Reference no: EM131911733

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