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A bulldozer with a first cost of $70,000 may be used for a maximum of 6 years. Its salvage value, which decreases by 15% per year, is described by the equation S = 70,000(1 - 0.15)n, where n is the number of years after purchase. The operating cost of the dozer will be constant at $75,000 per year. At an interest rate of 12% per year, what is the economic service life of the machine? What is the associated AW value?

 

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91721604

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