Bloggs Engineering has recently carried out a detailed cost analysis of its machinery. Having studied past records
Fantastic news! We've Found the answer you've been seeking!
Question:
Bloggs Engineering has recently carried out a detailed cost analysis of its machinery. Having studied past records of the maintenance costs and depreciation of its machines, the company has found that for a machine with a capital cost C = $10,000, the maintenance cost and resale value at the end of year ‘n’ of its life can be expressed by the following formulae:
Bloggs Engineering wants to find the optimum replacement time for the machines over a period of eight years, given that the annual cost of capital is 10%.
The maintenance cost at the end of year 7 is
a.
$2,292
b.
$25,841
c.
$3,959
d.
$4,467
Related Book For
Corporate Finance and Investment decisions and strategies
ISBN: 978-1292064062
8th edition
Authors: Richard Pike, Bill Neale, Philip Linsley
Posted Date: