A loader is being considered to tram material from a stockpile. The cost of the machine is estimated at $1,400,000 with an estimated salvage value of $425,000 at the end of year seven. Operating costs are estimated to be $320,000 annually with major repairs of $250,000 and $300,000 required at the end of years 3 and 5, respectively. Given the required tram distance, the machine can move 2,900 tons of material daily, 250 days per year. For a desire minimum rate of return of 12%, calculate the present worth cost and the equivalent annual cost of operating the machine over the next seven years. Finally, calculate the breakeven cost per ton of material being trammed.

A loader is being considered to tram material from a stockpile. The cost of the machine is estimated at $1,400,000 with an estimated salvage value of $425,000 at the end of year seven. Operating costs are estimated to be $320,000 annually with major repairs of $250,000 and $300,000 required at the end of years 3 and 5, respectively. Given the required tram distance, the machine can move 2,900 tons of material daily, 250 days per year. For a desire minimum rate of return of 12%, calculate the present worth cost and the equivalent annual cost of operating the machine over the next seven years. Finally, calculate the breakeven cost per ton of material being trammed.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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