Amachine has the initial cost (at time zero) of $150,000, an annual maintenance cost of $2,500, and a salvage value of $30,000. the useful life of the machine is 10 years. at the end of years 4 and 8, it requires a major services, which costs $20,000 and $10,000, respectively. at the end of year 5, it will need to be overhauled at a cost of $45,000. what is the equivalent uniform annual worth of owning and operating this particular machine if interest is 5%?

the equivalent uniform annual worth of owning and operting the machien at 5% diiscount rate:

$17,610.88

Explanation:

we will bring each exceptional value to present date and then calcualte the PTM of that

First step:

present value of eahc lump sum:

overhaul:

 Maturity 45,000

time  5

PV 35,258

Services:

20,000 year 4  = 16,454.05

10,000 year 8 =  6,768.39

salvage value

30,000 10 years =  18,417.40

total present worth:

150,000 + 6,768.39 + 16454.05 + 35258 - 18,417.40 = 190,063.04

now we calcualtethe PTM of this present value

PV  $190,063.04

time10

rate0.05

C  $ 15,110.881

we add the 2,500 maintenance cost

$17,610.88

This will be the equivalent uniform annual worth of owning and operting the machien at 5% diiscount rate

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