Question

please include cash flow

1. + Consider a palletizer at a bottling plant that has a first cost of $150,000, operating and maintenance costs of $17,500 per year, and an estimated net salvage value of $25,000 at the end of 30 years. Assume an interest rate of 8 percent. What is the annual equivalent cost of the investment if the planning horizon is 30 years? a. $29,760 c. $31,980 b. $30,600 d. $35,130

Answer 1

Answer:

First cost F=150000

O&M cost M=17500 per year

Salvage Value S=25000

N=30 Years

interest rate r=8%

Annual Equivalent cost AW= Annual equivalent for First cost + O&M cost - Annual equivalent for salvage Value

AW=F*r/(1-(1+r)^-N) +M -S*r/((1+r)^N-1)

AW=150000*8%/(1-(1+8%)^-30) + 17500-25000*8%/((1+8%)^30-1)=$30603.43