An industrial sewing machine costs $5104 and is expected to have a scrap value o

Question

An industrial sewing machine costs $5104 and is expected to have a scrap value of $3727 whenever it is retired. Operating and Maintenance costs are $1314 for the first year and expected to increase by $2615 thereafter. If the MARR is 12%, determine the minimum equivalent uniform annual cost associated with the optimal economic life of the machine. The service life of this machine is 5 years. Note: round your answer to two decimal places, and do not include spaces, currency signs, plus or minus signs, nor commas

Explanation / Answer

Ans: 6784.85

Explanation:

EUAC = 5104(A/P, 12%, 5) + [1314 + 2615(A/G, 12%, 5)] - 3727(A/F, 12%, 5)

= 5104(0.2774) + [1314 + 2615(1.775)] - 3727(0.1574)

= 1415.85 + 5955.63 - 586.63

= 6784.85

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