You have purchased a machine costing 34000 The machine will

You have purchased a machine costing $34,000. The machine will be used for two years, and at the end of this time, its salvage value is expected to be $12,000. The machine will be used 3,000 hours during the first year and 5,000 hours during the second year. The expected annual net savings will be $38,000 during the first year and $50,000 during the second year. If your interest rate is 14%, what would be the equivalent net savings per machine hour? Click the icon to view the interest factors for discrete compounding when i-14% per year The equivalent net savings are Sper machine hour. (Round to the nearest cent.) More Info Single Payment Equal Payment Series Capital Recovery Factor (AP, i, N) 1.1400 0.6073 0.4307 0.3432 0.2913 Compound Present Worth Factor Compound Sinking Amount Factor (FIA, ?N) 1.0000 2.1400 3.4396 4.9211 6.6101 Present Worth Factor (P/A, i, N) 0.8772 1.6467 2.3216 2.9137 3.4331 Amount Factor 1.1400 1.2996 1.4815 1.6890 1.9254 0.8772 0.7695 0.6750 0.5921 0.5194 Fund Factor (AF, i, N) 1.0000 0.4673 0.2907 0.2032 0.1513 4 2.1950 2.5023 2.8526 3.2519 3.7072 0.4556 0.3996 0.3506 0.3075 0.2697 8.5355 10.7305 13.2328 16.0853 19.3373 0.1172 0.0932 0.0756 0.0622 0.0517 3.8887 4.2883 4.6389 4.9464 5.2161 0.2572 0.2332 0.2156 0.2022 0.1917 Enter your answer in the answer box and then cl 10 All parts showing

Solution

Year Cash flows PVf @ 14% Present Value 0 -34000 1 -34000 1 38000 0.877193 33333.333 2 62000 0.769468 47706.987 Present value of Cash flows 47040 Divide: Total Number of Hours 8000 (3000+5000) hours Equivalent savings per hour 5.88 per hour