What is the economic life of the press

Reference no: EM132173438

Question: The College Park Sheet Metal Works (CPSMW), a very profitable Maryland corporation, purchased a press for $18,000. The annual operating and maintenance costs of this equipment are $3,000 for the first year, $3,500 for the second year, $5,500 for the third year, and they increase by $2,500 every year after that. The machine produces a sale of $13,000 per year. The resale value at the end of the first year is $12,000 and it reduces by $3,000 each year. CPSMW uses straight-line depreciation, a five-year life, and zero resale value for depreciation purposes. If the cost of money is assumed to be 10%, and its tax rate is 30%, what is the economic life of this press?

Reference no: EM132173438

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