What is the optimal economic life

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A replacement piece of equipment can be purchased for the machine above at a first cost of $25,000. Annual maintenance costs the first year are expected to be $1000 and increase by $300 each year. If this equipment were to be sold after 1 year, income of 20,000 could be realized. Each year the machine is kept, the salvage value would decrease by $3500. What is the optimal economic life and associated EAC of this equipment? Hint: EAC3=$6981

Reference no: EM131262771

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