A certain machine costs pound25 000 to purchase and install, Mechanical Engineering

A certain machine costs pound25 000 to purchase and install

A certain machine costs £25 000 to purchase and install. It has salvage values and operating costs as shown in the table on the next page. The salvage value of £20 000 listed at time 0 reflects the loss of the installation costs at the time of installation. The MARR is 12%.

(a) What is the economic life of the machine?

(b) What is the equivalent annual cost over that life?

Now assume that the ALARR is 5%.

(d) What is the equivalent annual cost over that life?

(e) Explain the effect of decreasing the MARR.

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Mechanical Engineering: A certain machine costs pound25 000 to purchase and install

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