The ESL is: Select one: a. AW=-122,232 b. 8 years with AW=$-110,990 c. 8 years a

Question

The ESL is:

Select one:

a. AW=-122,232

b. 8 years with AW=$-110,990

c. 8 years and corresponds to AW = $-199,000

d. 4 years

A piece of equipment has a first cost of $150,000 and a salvage value described by S = 120,000 - 20,000k, where k is the number of years since it was purchased. The salvage value does not go below zero. Determine its economic service life at an interest rate of 15% per year, using annual marginal cost estimates. The annual operating cost is estimated by the equation AOC = 70,000 + 2000k, and the equipment will have a maximum useful life of 8 years.

Explanation / Answer

b

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