Question

11.6 A machine purchased 1 year ago for $85,000 costs more to operate than anticipated. When purchased,the machine was expected to be used for 10 years with annual maintenance costs

of $22,000 and a $10,000 salvage value. However, last year, it cost the company $35,000 to maintain it, and these costs are expected to escalate to $36,500 this year and in-crease by $1500 each year thereafter. The market value is now estimated to be $85,000 - $10,000 k,where k is the number of years since the machine was purchased. It is now estimated that this machine will be useful for a maximum of 5 more years. A replacement study is to be performed now. Determine the values of P, n, AOC. and S of this defender.

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