An engineering firm is investigatingthe possibility of acquiring new automated p
ID: 2952079 • Letter: A
Question
An engineering firm is investigatingthe possibility of acquiring new automated packaging equipment at acost of $12,000. It is expected that the equipment will have asalvage value of$1,000 at the end of its useful life of 10 years.It is determined by the plant engineering department at the companythat the operation and maintenance cost will be $500 in the firstyear and will gradually increase every year starting year 2 at therate of $50 until the equipment is retired. Determine theequivalent uniform annual cost (EUAC) if MARR for the company is10%.
Explanation / Answer
AC = $12,000(A/P, 10%, 10) + $500 + $50(A/G,10%, 10) - $1,000(A/F, 10%,10)
= $1,952.94 + $500 + $186.27 -$62.74
= $2,576.47