How you would find the most economical useful life

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Reference no: EM131810503

Your firm is in need of a machine that costs $5000. During the first year the maintenance costs are estimated to be $400. The maintenance costs are expected to increase by $150 each year up to a total of $1750 at the end of Year 10. The machine can be depreciated over 5 years using the straightline method. Assume each year's depreciation is a known amount Dy . There is no salvage value. Develop an expression to show how you would find the most economical useful life of this machine on a before-tax basis. Contributed by D. P. Loucks, Cornell University

Reference no: EM131810503

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