solution

MARR = 9.00%
This machine has a 9 year economic service life after which it will have a $13,098 salvage value. The operating
costs for this machine are expected to be $6,433 for the first year, increasing by $640/year for each year
thereafter (for example, $6,433 for year 1, $7,073 for year 2, $7,713 for year 3, etc). At what market value of
the existing machine would make the proposed machine equally economically attractive?
A manufacturing machine was purchased 10 years ago for $158,000. The machine has a useful life of just 4
more years, at which time it will have no salvage value. The operating costs of this machine are expected to be
$12,750 this year and increasing by $3,245 each year thereafter (for example, $12,750 for year 1, $15,995 for
year 2, $19,240 for year 3, etc).
A proposal has been made to purchase a new machine for $85,118