Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 20

You work for Midstates Solar Power. A manager asked you to determine which of the following two machines will have the lower
a) capital recovery and b) equivalent annual total cost. Machine Semi2 has a first cost of $80,000 and an operating cost of $21,000 in year 1, increasing by $500 per year through year 5, after which time it will have a salvage value of $13,000. Machine Auto1 has a first cost of $62,000 and an operating cost of $21,000 in year 1, increasing by 8% per year through year 5, after which time it will have a scavenge value of $2000. Utilize an interest rate of 10% per year to determine both estimates.