A truck can be purchased for $55,000. Annual O&M costs are expected to increase by $1,800 every
Question:
A truck can be purchased for $55,000. Annual O&M costs are expected to increase by $1,800 every year, with a 1st-year O&M cost of $4,000. (MARR = 26% and the planning horizon is 10 years)
• The compressor salvage value for a given period t is calculated based on the following equation:
Salvage value (t) = $30,000– $3,000 * t
a) Find the Optimum Replacement Interval for this Equipment
b) Find the Optimum Replacement Interval for this Equipment if the O&M costs are decreased to $1,700/yr. What is your conclusion?
c) Find the Optimum Replacement Interval for this Equipment if the initial cost is reduced to $52,000. What is your conclusion? (independent of part b)
Engineering Economy
ISBN: 978-0133439274
16th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling