Question: A $40,000 machine will be purchased by a com- pany whose interest rate is 12%. The installation cost is $5K, and removal costs are insignificant.

A $40,000 machine will be purchased by a com- pany whose interest rate is 12%. The installation cost is $5K, and removal costs are insignificant. What is its economic life if its salvage values and O&M costs are as follows: Year 1 2 3 4 5 S $35K 30K 25K 20K 15K O&M $8K 14K 20K 26K 32K (a) Use the tabulated factors. (b) Use a spread sheet like Exbibit 10.3.

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