Leroy purchased an Al-based robotics system with the first cost of $345,000, an AOC of $148,000 per year, a $140,000 salvage value, and an ESL of 3 years. Rather than trading after 3 years, he kept the system for a total of 5 years. Due to the wear factor and expense of repairs, its AOC increased to $280,000 per year starting in year 4, plus the salvage value went to zero. At /= 10% per year, what is the percentage increase in the AW of costs that Leroy experienced? The percentage increase in the AW of costs that Leroy experienced is 12.57 %.
Leroy purchased an Al-based robotics system with the first cost of $345,000, an AOC of $148,000 per year, a $140,000 salvage value, and an ESL of 3 years. Rather than trading after 3 years, he kept the system for a total of 5 years. Due to the wear factor and expense of repairs, its AOC increased to $280,000 per year starting in year 4, plus the salvage value went to zero. At /= 10% per year, what is the percentage increase in the AW of costs that Leroy experienced? The percentage increase in the AW of costs that Leroy experienced is 12.57 %.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Leroy purchased an Al-based robotics system with the first cost of $345,000, an AOC of $148,000 per year, a $140,000 salvage value,
and an ESL of 3 years. Rather than trading after 3 years, he kept the system for a total of 5 years. Due to the wear factor and expense
of repairs, its AOC increased to $280,000 per year starting in year 4, plus the salvage value went to zero. At /= 10% per year, what is
the percentage increase in the AW of costs that Leroy experienced?
The percentage increase in the AW of costs that Leroy experienced is 12.57 %.
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