What is the optimal ownership policy

Reference no: EM132168961

Question: A 2000-pound, counterbalanced, electric forklift can be purchased for $25,000 plus $3000 for the charger and $3000 for a battery. The forklift's market value is 10% less for each of its first 6 years of service. After this period the market value declines at the rate of 7.5% for the next 6 years. The battery has a life of 4 years and a salvage value of $300. The charger has a 12-year life and a $100 salvage value. The charger's market value declines 20% per year of use. The battery's market value declines by 30% of its purchase price each year. Maintenance of the charger and battery are minimal. The battery will most likely not work with a replacement forklift. Maintenance of the forklift is $200 per year during Years 1 and 2 while the warranty is in place. In Year 3 it jumps to $600 and increases $50 per year thereafter. What is the optimal ownership policy?

Reference no: EM132168961

Questions Cloud

How you would find the most economical useful life : Your firm is in need of a machine that costs $5000. During the first year the maintenance costs are estimated to be $400. The maintenance costs are expected.

How does vygotskys theory help esl students who are : Especially if their parents are still not speaking much English at home, so school is the only place that they are hearing English.

What is the eac for the optimal policy : Mytown's street department repaves a street every 8 years. Potholes cost $12,000 per mile beginning at the end of Year 3 after construction or repaving.

What is the optimal life of the forklift : A 2000-pound, counterbalanced, propane forklift can be purchased for $30,000. Due to the intended service use, the forklift's market value drops 20%.

What is the optimal ownership policy : A 2000-pound, counterbalanced, electric forklift can be purchased for $25,000 plus $3000 for the charger and $3000 for a battery.

Determine the economic life of the press : J&E Fine Wines recently purchased a new grape press for $150,000. The annual operating and maintenance costs for the press are estimated to be $7500.

What is the economic life of the pipe : A chemical process in your plant leaves scale deposits on the inside of pipes. The scale cannot be removed, but increasing the pumping pressure maintains flow.

Examine the economic life of the pump : An electric oil pump's first cost is $45,000, and the interest rate is 10%. The pump's end-of-year salvage values over the next 5 years are $42K, $40K, $38K.

What is the economic life of the machine tool : A machine tool, which has been used in a plant for 10 years, is being considered for replacement. It cost $9500 and was depreciated by MACRS depreciation.

User Account

All Pages