Question: Exercise 4 To improve package tracking at a UPS transfer facility, conveyor equipment was upgraded with RFID sensors at a cost of $545,000. The total

Exercise 4 To improve package tracking at a UPS transfer facility,

Exercise 4 To improve package tracking at a UPS transfer facility, conveyor equipment was upgraded with RFID sensors at a cost of $545,000. The total expected life is up to 5 years. The operating cost is expected to be $118,000 per year for the first 3 years and $181,000 for the next 2 years. The salvage value of the equipment is expected to be $150,000 for the first 2 years, $95,000 for the second two years and, due to obsolescence, it won't have a significant value for the last year. At an interest rate of 10% per year, determine The economic service life of the equipment and associated annual worth The percentage increase in the AW of cost if the equipment is replaced 2 years earlier than its Economic Service Life a. b

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