Question: Problem 4 Table below shows information for a machine that is planning to purchase, interest rate of 10% per year Year First Cost Maintenance and

Problem 4

Table below shows information for a machine that is planning to purchase, interest rate of 10% per year

Year

First Cost

Maintenance and operation cost

Salvage

AW

0

345,000 (First cost)

1

148,000

140,000

2

148,000

140,000

3

148,000

140,000

4

210,000

0

5

210,000

0

6

210,000

0

  1. Draw Cash flow diagram

  1. Complete the fifth Column (AW). Show detailed calculation

  1. Specify the economical service life (ESL) and explain why.

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