i need help : i have done them but i need to make sure of my answer i have a tes

Question

i need help : i have done them but i need to make sure of my answer i have a test after 3 weeks and need help of Manufacturing system Engineering subject : those two questions :

1.An asset purchased three years ago can be replaced by a new type of equipment.   The market value of the old machine is currently $100,000 and will be $75,000, $60,000, $50,000, $40,000, $25,000, $15,000, and $0 at the end of each of the next seven years.   The annual operating costs (AOC) for each of the next five years will be $28,000, $31,000, $34,000, $34,000, $34,000, $45,000, and $49,000.   Determine the economic service life, if the MARR is 14%?
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2.What market rate of return must an investor make to earn a real interest rate of 10% a year on an investment after allowing for the effects of 4% per year inflation?

Explanation / Answer

Economic service life is the time period over which assets NPV is maximised.

Economic service life is 3 years.

Year Market Value Operating Cost Net Amount Present Value Net Present Value Rank 3 100000 100000 0.675 67500 4 75000 28000 47000 0.592 27824 5 60000 31000 29000 0.519 15051 6 50000 34000 16000 0.456 7296 7 40000 34000 6000 0.4 2400 8 25000 34000 -9000 0.351 -3159 9 15000 45000 -30000 0.308 -9240 10 0 49000 -49000 0.27 -13230

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