Find the economic service life of the new machine

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Reference no: EM13238857

A company has a forklift, but is considering purchasing a new electric-lift truck that would cost of $18,000, have operating costs of 1000 in the first year, ,and have a salvage value of $10,000 at the end of the first year. For the remaining years, operating cost increase e4ach year by 14% over previous year's costs. Similarly. The salvage value declines each year by 25% from previous year's salvage value. The lift truck has a maximum life of seven years. An overhaul costing $3,000 and $4,500 will be required during the fifth and seventh years of service, respectively. The firm's required rate of return of 15%. Find the economic service life of this new machine.

Reference no: EM13238857

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