The following pair of assets differ only in the MARR. The problem asks you to determine the effect of this difference on the economic life and to explain the result. All assets decline in value by 20 percent ofcurrent value each year. Installation costs are zero for all assets. Further data concerning the four pairs of assets are given in the table that follows.Initial OperatingRate of OperatingAssetFirst CostCostCost IncreaseMARR$130,000$130,000$35,000$35,00012.5%/year12.5%/yearA5%В25%a. Determine the economic lives for assets A and B.b. Create a diagram showing the EAC(capital), the EAC(operating), and the EAC(total) for assets A and B.c. Explain the difference in economic life between A and B.a. The economic life of asset A isyears, and the economic life of asset B isyears.(Type whole numbers.)B

Economic lives for an asset refers to the time period when the asset is useful for the owners. The…

The following pair of assets differ only in the MARR. The problem asks you to determine the effect of this difference on the economic life and to explain the result. All assets decline in value by 20 percent current value each year. Installation costs are zero for all assets. Further data concerning the four pairs of assets are given in the table that follows. Initial Operating Cost Rate of Operating Cost Increase 12.5%/year 12.5%/year Asset First Cost MARR A $130,000 $35,000 $35,000 5% $130,000 25% a. Determine the economic lives for assets A and B.

The following pair of assets differ only in the MARR. The problem asks you to determine the effect of this difference on the economic life and to explain the result. All assets decline in value by 20 percent current value each year. Installation costs are zero for all assets. Further data concerning the four pairs of assets are given in the table that follows. Initial Operating Cost Rate of Operating Cost Increase 12.5%/year 12.5%/year Asset First Cost MARR A $130,000 $35,000 $35,000 5% $130,000 25% a. Determine the economic lives for assets A and B.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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