
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Please answer question 2 with details on how to do it. Thank you.

Transcribed Image Text:2. A company must purchase a machine that will be used over the next 10 years. The
purchase price is $200,000. The salvage value after 10 years is $20,000. Maintenance and
replacement cost for the machine are $5000 per year. Annual insurance cost is 2% of the
purchase price. Electricity cost is $3000 per year. Draw the cash flow diagram and compute
equivalent uniform annual cost (EUAC) if the interest rate is 6% per year. (A=?)
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