A new equipment is being considered to replace an old equipment in a facility. The equipment would cost $7,480 and it would require a special maintenance at year 10 of the life expectancy of the equipment, which is of 15 years (also life of the project). The new equipment will generate savings in the order of $1,000 per year. If a discount rate of 6% is used what is the maximum cost of the maintenance at year 10 to make the project to be considered as a feasible option?

Answer rating: 100% (QA)

Analysing the feasibility of replacing the equipment To assess the feasibility of the project we can perform a present value PV analysis This will hel... View the full answer