A new asset has been proposed to your company: Year Investment O & M Costs Salvage...

A new asset has been proposed to your company:

Year	Investment	O & M Costs	Salvage Value
0	$14,000
1		$3,400	$8,000
2		$4,600	$6,000
3		$5,800	$4,000
4		$7,200	$2,000
5		$8,300	0

How long should the asset be kept? Use a MARR of 12%.

Expert Solution

EAC compute for diff holding periods & select the period with least EAC.

EAC if hold for 1 year:

EAC if hold for 2 year:

EAC if hold for 3 year:

EAC if hold for 4 year:

EAC if hold for 5 year:

EAC is less, if it is hold for 3 years.

jeff jeffy answered 2 years ago

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