What is the total annual equivalent expense for operating

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Reference no: EM131526736

A small factory heats its office block by diesel air heater and spends $800 per month on diesel for this purpose (assume whole year need the same operation cost per month). Cost increases of diesel are expected to be 12% per year starting one year from now. On the other hand, the maintenance on the diesel air heater is $355 per year, and this expense is expected to decrease by 2% per year starting one year from now. If the interest rate is 15% per year (compounded annually) and the useful life of the diesel air heater is 10 years, what is the total annual equivalent (AW) expense for operating and maintaining the diesel air heater?

Reference no: EM131526736

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