White Oaks Properties builds strip shopping centers and small malls. The company plans to replace its refrigeration, cooking, and HVAC equipment with newer models in one entire center built 9 years ago. The original purchase price of the equipment was $638,000 nine years ago and the operating cost has averaged $240,000 per year. Determine the equivalent annual cost of the equipment if the company can now sell it for $184,000. The company’s MARR is 25% per year.
What will be an ideal response?
AW = -638,000(A/P,25%,9) – 240,000 + 184,000(A/F,25%,9)
= -638,000(0.28876) – 240,000 + 184,000(0.03876)
= $-417,097
Trades & Technology
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