Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 57

A piece of equipment has a first cost of $150,000, a maximum useful life of 7 years, and a market (salvage) value described by the relation S = 120,000 - 20,000 k , where k is the number of years since it was purchased. The salvage value cannot go below zero. The AOC series is estimated using AOC = 60,000 + 10,000 k. The interest rate is 15% per year. Determine the economic service life
a) by hand solution, using regular AW computations, and b) by spreadsheet, using annual marginal cost estimates.