Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 39

A new asset is available for $200,000. O M costs are $20,000 each year for the first five years, $22,000 in year six, $25,000 in year seven, and $28,000 in year eight. Salvage values are estimated to be $130,000 after one year and will decrease at the rate of 20% per year thereafter. At a MARR of 12%, determine the economic service life of the asset.