An equipment cost $80,000 initially

Finance Dec 21, 2020

An equipment cost $80,000 initially. The market value has been declining at the rate of $15,000 yearly. The O & M costs in year 1 were $10,000 and have been increasing by $2,000 from year. Determine the marginal cost of this equipment.

Expert Solution

Value of Equipment declining per year = $15,000

O&M cost Increasing per year = $2,000

Marginal Cost of Equipment per year = 15,000 +2,000

= $17,000

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