Question Value:$25$

A new bottle$-$capping machine costs $70,000,$ including $7,000$ for installation.$$ The machine is expected to have a useful life of eight years with no salvage value at that time $($assume straight$-$line depreciation$).$ Operating and maintenace costs are expected to be $4,000$ for the first year, increasing by $1,500$ each year thereafter.$$ Interest is $12\%.$

Construct a spreadsheet that has the following headings:$$ Year, Salvage Value, Maintenance Costs, EAC $($Capital Costs$),$ EAC $($Operating Costs$),$ and EAC $($Total Costs$).$ Compute the EAC $($Total Costs$)$ if the bottle capper is kept for n years, n $=1,...,8.$

What is the economic life of the bottle capper $($in years$)?$