.-...-Problems 301it will cost $500 installed. How long must the treated
part last to be the preferred alternative, assuming
10% interest?9-62 Neither of the following machines has any net salvage
value.
At what useful life are the machines equivalent if
(a) 10% interest is used in the computations?
(b) 0% interest is used in the computations?
9-63 A machine costs $5240 and produces benefits of
$1000 at the end of each year for eight years. Assume
continuous compounding and a nominal annual inter-
est rate of 10%.
(a) What is the payback period (in years)?
(b) What is the breakeven point (in years)?
(c) Since the answers in (a)and (b)are different,
which one is "correct"?~'!A B
Original cost $55,000 $75,000
Annual expenses
Operation 9,500 7,200
Maintenance 5,000 3,000
Taxes and insurance 1,700 2,250