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 $44,000 per year thereafter to a minimum of $30,000. Operating costs are $20,000 the 1st year, increasing by 7% per year. Maintenance costs are only $8,000 the 1st year but will increase by 37% each year thereafter. Milliken’s MARR is 20%. Determine the optimum replacement interval (years) for the dyer
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 $44,000 per year thereafter to a minimum of $30,000. Operating costs are $20,000 the 1st year, increasing by 7% per year. Maintenance costs are only $8,000 the 1st year but will increase by 37% each year thereafter. Milliken’s MARR is 20%. Determine the optimum replacement interval (years) for the dyer
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications
Section: Chapter Questions
Problem 30P
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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 $44,000 per year thereafter to a minimum of $30,000. Operating costs are $20,000 the 1st year, increasing by 7% per year. Maintenance costs are only $8,000 the 1st year but will increase by 37% each year thereafter. Milliken’s MARR is 20%. Determine the optimum replacement interval (years) for the dyer
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