What is the economic life of each device

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An old device was built for $100,000 and currently has a book value of $48,000 with a useful life of 8 years. The device has no market value but can be scrapped for parts for $40,000 today and will decrease each year by $5,000. Currently the device costs $32,000 per year to operate and increases each year by $3,200. The device costs $15,000 a year to maintain and will increase each year by $2,300.

A new device will cost $125,000 and have a useful life of 10 years. The decive is expected to have operating costs of $26,000 a year and will increase each year by 10%. The maintenance costs for the device are at $8,000 per year and will increase each year by $1,500. The salvage value is estimated at $98,000 and will decrease each year by $8,000.

Using a MARR of 10%, What is the economic life of each device?

Reference no: EM131586370

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