Question

EXAMPLE 11.2-2 The maintenance cost and resale value per year of a machine whose purchase price is ? 7,000 is given below. TABLE 11.2 Year: 1, 2, 3, 4, 5, 6, 7, 8 Maintenance cost in ?: 900, 1,200, 1,600, 2,100, 2,800, 3,700, 4,700, 5,900 Resale value in ?: 4,000, 2,000, 1,200, 600, 500, 400, 400, 400 When should the machine be replaced? [J.N.T.U. Hyderabad B.Tech. Nov., 2010; R.T.M. Nagpur U.B. Tech. June, 2006; Karn. U.B.E. (Mech.) 1997; L.I.M.S. Kolkata, 1994]

          EXAMPLE 11.2-2
The maintenance cost and resale value per year of a machine whose purchase price is ? 7,000 is given below.
TABLE 11.2
Year: 1, 2, 3, 4, 5, 6, 7, 8
Maintenance cost in ?: 900, 1,200, 1,600, 2,100, 2,800, 3,700, 4,700, 5,900
Resale value in ?: 4,000, 2,000, 1,200, 600, 500, 400, 400, 400
When should the machine be replaced?
[J.N.T.U. Hyderabad B.Tech. Nov., 2010; R.T.M. Nagpur U.B. Tech. June, 2006; Karn. U.B.E. (Mech.) 1997; L.I.M.S. Kolkata, 1994]

EXAMPLE 11.2-2
The maintenance cost and resale value per year of a machine whose purchase price is ? 7,000 is given below.
TABLE 11.2
Year: 1, 2, 3, 4, 5, 6, 7, 8
Maintenance cost in ?: 900, 1,200, 1,600, 2,100, 2,800, 3,700, 4,700, 5,900
Resale value in ?: 4,000, 2,000, 1,200, 600, 500, 400, 400, 400
When should the machine be replaced?
[J.N.T.U. Hyderabad B.Tech. Nov., 2010; R.T.M. Nagpur U.B. Tech. June, 2006; Karn. U.B.E. (Mech.) 1997; L.I.M.S. Kolkata, 1994]

Added by Jose Manuel S.

Principles of Economics

Gregory Mankiw 8th Edition

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Solved by Expert Breanna Ollech

11/10/2023

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The purchase price of the machine is $7,000. Each year, the machine incurs a certain maintenance cost and has a certain resale value. Show more…

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EXAMPLE 11.2-2: The maintenance cost and resale value per year of a machine whose purchase price is $7,000 is given below. TABLE 11.2 Year | Maintenance Cost ($) | Resale Value ($) ---------------------------------------------- 1 | 900 | 4,000 2 | 1,200 | 2,000 3 | 1,600 | 1,200 4 | 2,100 | 600 5 | 2,800 | 500 6 | 3,700 | 400 7 | 4,700 | 400 8 | 5,900 | 400 When should the machine be replaced?