You just purchased a new milling machine for $100,000. The market value for this machine declines...

 

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You just purchased a new milling machine for $100,000. The market value for this machine declines by 10% each year from its previous year. The max. useful life is 10 years. The O&M costs are $2000 in the first year and increase by 30% cach year. For simplicity, the numbers are provided in the following table: Market O&M Value Costs 0 $100,000 1 $90,000 $2,000 2 S81,000 $2,600 3 $72,900 $3,380 4 $65,610 $4,394 5 s59,049 $5,712 $53,144 $7,426 7 $47,830 $9,654 8 $43,047 $12,550 $38,742 $16,315 10 S34,868 $21,209 If the interest rate is 12%, what is the economic service life of the machine? And what is its corresponding equivalent annual costs? (You do not need to try the 10 years. Just try years 5, 6, and 7) You just purchased a new milling machine for $100,000. The market value for this machine declines by 10% each year from its previous year. The max. useful life is 10 years. The O&M costs are $2000 in the first year and increase by 30% cach year. For simplicity, the numbers are provided in the following table: Market O&M Value Costs 0 $100,000 1 $90,000 $2,000 2 S81,000 $2,600 3 $72,900 $3,380 4 $65,610 $4,394 5 s59,049 $5,712 $53,144 $7,426 7 $47,830 $9,654 8 $43,047 $12,550 $38,742 $16,315 10 S34,868 $21,209 If the interest rate is 12%, what is the economic service life of the machine? And what is its corresponding equivalent annual costs? (You do not need to try the 10 years. Just try years 5, 6, and 7)