Frame & Foto Corporation has done some research and they have found that the revenue generated...

 

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Frame & Foto Corporation has done some research and they have found that the revenue generated each year by their high-quality imaging machines (which cost $350,000) declines due to break downs and increasing percentage of images with imperfections. They have also done some work to forecast what to expect in terms of revenue and salvage value for a particular year in the future. These machines may overall lose money, but they are deemed necessary to stay in the market. Once customers are in the stores, the business makes a greater return on selling frames, electronic photo displays, etc. Given these revenue and salvage value projections and a MARR of 10%, what is the optimum time period to keep this machine? (i.e. what is its Economic Service Life?) year 1 2 3 4 5 6 revenue $10,000 -$12,871 -$36,967 -$61,896 -$87,462 -$113,548 salvage $90,000 $81,000 $72,900 $65,610 $59,049 $53,144 Frame & Foto Corporation has done some research and they have found that the revenue generated each year by their high-quality imaging machines (which cost $350,000) declines due to break downs and increasing percentage of images with imperfections. They have also done some work to forecast what to expect in terms of revenue and salvage value for a particular year in the future. These machines may overall lose money, but they are deemed necessary to stay in the market. Once customers are in the stores, the business makes a greater return on selling frames, electronic photo displays, etc. Given these revenue and salvage value projections and a MARR of 10%, what is the optimum time period to keep this machine? (i.e. what is its Economic Service Life?) year 1 2 3 4 5 6 revenue $10,000 -$12,871 -$36,967 -$61,896 -$87,462 -$113,548 salvage $90,000 $81,000 $72,900 $65,610 $59,049 $53,144

Answer rating: 100% (QA)

SOLUTION To find the economic service life of the highquality imaging machine we need to find the ye... View the full answer