Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 49

An engineer determined the ESL of a new $80,000 piece of equipment and recorded the calculations shown below. [Note that the numbers are annual worth values associated with various years of retention; that is, if the equipment is kept for, say, 3 years, the AW (years 1 through 3) of the first cost is $32,169, the AW of the operating cost is $51,000, and the AW of the salvage value is $6042.] The engineer forgot to enter the AW of the salvage value for 2 years of retention. From the information available, determine the following:
a) The interest rate used in the ESL calculations.
b) The salvage value after 2 years, if the total AW of the equipment in year 2 was $78,762. Use the interest rate determined in part
a).