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A medium-sized industrial grade compressor can be purchased for $35,000. Annual O&M costs are expected to...

A medium-sized industrial grade compressor can be purchased for $35,000. Annual O&M costs are expected to increase $1,300 every year, with a 1st year O&M cost of $2,000. (MARR =16%, and planning horizon is 10 years)

• The compressor salvage value for a given period t, is calculated based on the following equation: Salvage value (t) = $30,000– $3,000 * t

a) Find the Optimum Replacement Interval for this Equipment

b) Find the Optimum Replacement Interval for this Equipment if the O&M costs is increased to $1,600/yr. What is your conclusion?

c) Find the Optimum Replacement Interval for this Equipment if the initial cost is reduced to $32,000. What is your conclusion?

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ekkarill92 answered 7 months ago
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