Self-Study Questions

Questions 1 through 3 relate to the following situation: Mountain Systems buys a laser printer for $1200. The end-of-year-1 salvage value is expected to be $1000 and will decrease at a rate of $150 per year for each year after that. The operating and maintenance costs will start at $100 per year and increase at a rate of $25 per year for each year after that. The MARR is 12%.

1.Complete the following table for computing the economic life of the laser printer.
End of Year(1) Salvage Value if Retired at Year n(2) AE(i) Cost If Retired in Year n [CR(i)](3) Operating & Maintenance Costs for Year n(4) PW(i) of O&M for Year n in Year 0(5) Sum of Years 0 O&Ms through Year n(6) AE(i) Cost of Operating for n Years(7) Total AE(i) If ...

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