Question: 2. A small construction company owns a generator which was purchased for $11,000 three years ago. Its current salvage value is $2400 and that is

2. A small construction company owns a generator which was purchased

2. A small construction company owns a generator which was purchased for $11,000 three years ago. Its current salvage value is $2400 and that is expected to fall to $1400 next year, $980 the following year and subsequently decline by 30% per annum. Operating and maintenance is now $1000 p.a. and expected to rise by $500 p.a. There is also a need for a $1000 overhaul this year and every third year subsequently. The best available new generator would cost the company $9500.00; and other data for the new generator are summarized below. MARR is 12%. (a) Find the economic life and the minimum AEC of the new generator. (b) Find the economic life and the minimum AEC of the existing generator. (c) Should the new generator be purchased today

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