A machine used to shred cardboard boxes for composting has a first cost of $10,000, an AOC of $7000 per year, a 3-year life, and
no appreciable salvage value. Assume you were told that the service provided by the machine will be needed for only 5 years, which entails a repurchase and retention for only 2 years. What salvage value, S, is required after 2 years in order to make the 2-year AW value the same as it is for its 3-year life cycle AW? Assume i = 10% per year. Solve using factors and, if assigned, using a spread- sheet and Goal Seek.
Annual Payment where F is accumulated sum of amount, n is number of years and i is annual rate of interest. The standard notation equation is in the image since i can’t type it-
