What is the economic life of the insulated tank

Reference no: EM13188790

The Coma Chemical Company needs a large insulated stainless steel tank for the expansion of its plant.coma has located one at a Brewery that has just been closed.The brewery offers to sell the tank for $15000 including delivery. the Price is so low that coma believes that it can sell the tank at any future time and recover its $15000. The Outside of the tank is lined with heavy insulation that requires considerable maintenance.Estimated costs are as follows
Year maintenance cost
0 $2000
1 $500
2 $1000
3 $1500
4 $2000
5 $2500

a) on the basis of a 15% before Tax MARR, what is the economic life of the insulated tank;that is, how long should it be kept?
b) Is it likely that the insulated tank will be replaced by another tank at the end of its computed economic life? Explain.

Reference no: EM13188790

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