Question 8 Milliken uses a digitally controlled dyer for placing intricate patterns on manufactured carpet squares for home and commercial use. It is purchased for $400,000. Its market value will be $310,000 at the end of the 1st year and drop by $46,000 per year thereafter to a minimum of $30,000. Operating costs are $20,000 the 1st year, increasing by 8% per year. Maintenance costs are only $8,000 the 1st year but will increase by 35% each year thereafter. Milliken's MARR is 20%. Determine the optimum replacement interval for the dyer. Year(s)
Question 8 Milliken uses a digitally controlled dyer for placing intricate patterns on manufactured carpet squares for home and commercial use. It is purchased for $400,000. Its market value will be $310,000 at the end of the 1st year and drop by $46,000 per year thereafter to a minimum of $30,000. Operating costs are $20,000 the 1st year, increasing by 8% per year. Maintenance costs are only $8,000 the 1st year but will increase by 35% each year thereafter. Milliken's MARR is 20%. Determine the optimum replacement interval for the dyer. Year(s)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Question 8
Milliken uses a digitally controlled dyer for placing intricate patterns on manufactured carpet squares for home and commercial use. It is purchased for $400,000. Its
market value will be $310,000 at the end of the 1st year and drop by $46,000 per year thereafter to a minimum of $30,000. Operating costs are $20,000 the 1st year,
increasing by 8% per year. Maintenance costs are only $8,000 the 1st year but will increase by 35% each year thereafter. Milliken's MARR is 20%. Determine the
optimum replacement interval for the dyer.
Year(s)
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