this is question 6.8 Leland Blank & Anthony Tarquin, Engineering Economy , Eight

Question

this is question 6.8

Leland Blank & Anthony Tarquin, Engineering Economy, Eighth Edition

White Oaks Properties builds strip shopping cen- ters and small malls. The company plans to replace its refrigeration, cooking, and HVAC equipment with newer models in one entire center built 9 years ago. The original purchase price of the equipment was $638,000 nine years ago and the operating cost has averaged $240,000 per year. Determine the equivalent annual cost of the equip- ment if the companv can now sell it for $184,000 The company's MARR is 25% per year

Explanation / Answer

First cost = $638000

Annual operating cost = $240000

Salvage value at market cost = $ 184000

MARR = 25%

Years = 9

Equivalent annual cost = - $638000(A/P,25%,9)-$240000+$184000(A/F,25%,9)

-$184254.4- $638000(0.2888)-$240000+$184000(0.0388)

-$184254.4-$240000+$7139.2 = -$417115.2

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