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Question 4 (1 point) Tooth Co. plans on installing a machine to put the caps on toothpaste tubes. The machine costs $20 000 and the installation cost is $5000. Operating costs are $30 000 in the first year and increase by 5% every year. The depreciation rate is 40%, and MARR is 15%. Assume the technology doesn't change. What is the economic life of the toothpaste cap machine? 6 years 7 years 8 years 9 years

          Question 4 (1 point)
Tooth Co. plans on installing a machine to put the caps on toothpaste tubes. The machine costs
$20 000 and the installation cost is $5000. Operating costs are $30 000 in the first year and
increase by 5% every year. The depreciation rate is 40%, and MARR is 15%. Assume the
technology doesn't change.
What is the economic life of the toothpaste cap machine?
6 years
7 years
8 years
9 years

Question 4 (1 point)
Tooth Co. plans on installing a machine to put the caps on toothpaste tubes. The machine costs
20 000 and the installation cost is5000. Operating costs are 30 000 in the first year and
increase by 5% every year. The depreciation rate is 40%, and MARR is 15%. Assume the
technology doesn't change.
What is the economic life of the toothpaste cap machine?
6 years
7 years
8 years
9 years

Added by -Scar W.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Lottie Adams

Step 1

We know that the operating costs in the first year are $30,000 and they increase by 5% every year. So, the operating costs for each year can be calculated as follows: Year 1: $30,000 Year 2: $30,000 + 5% of $30,000 = $30,000 + $1,500 = $31,500 Year 3: $31,500 + Show more…

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Question 4 (1 point) Tooth Co. plans on installing a machine to put the caps on toothpaste tubes. The machine costs $20 000 and the installation cost is $5000. Operating costs are $30 000 in the first year and increase by 5% every year. The depreciation rate is 40%, and MARR is 15%. Assume the technology doesn't change. What is the economic life of the toothpaste cap machine? 6 years 7 years 8 years 9 years