What is the economic life of the machine

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Reference no: EM132050166

A new machine can be acquired for $25,800. Its operating costs for the first year of operation are expected to be $16,500, and they are expected to increase annually by an arithmetic gradient as the result of combined deterioration and obsolescence. This increase is expected to be $1,060 a year. The salvage value of the machine is expected to be 30% of the first cost whenever the machine is replaced. The minimum required rate of return is 20%. What is the economic life of the machine?

Reference no: EM132050166

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