6. You purchase a new piece of equipment for $65,000. Your net cash flow the first year is $18,000 but will increase by $2,500 per year the next year and the same for each year after. The equipment has a ten-year service life and a salvage value of $5,000. The interest rate is 9%. What is the annual capital cost and what is the equivalent annual savings?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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6. You purchase a new piece of equipment for $65,000. Your net cash flow the first year is
$18,000 but will increase by $2,500 per year the next year and the same for each year
after. The equipment has a ten-year service life and a salvage value of $5,000. The
interest rate is 9%. What is the annual capital cost and what is the equivalent annual
savings?
Transcribed Image Text:6. You purchase a new piece of equipment for $65,000. Your net cash flow the first year is $18,000 but will increase by $2,500 per year the next year and the same for each year after. The equipment has a ten-year service life and a salvage value of $5,000. The interest rate is 9%. What is the annual capital cost and what is the equivalent annual savings?
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