A machine having a first cost of $20,000 is expected to save $1500 in thefirst year of operation, and the savings should increase by $200 every year until (and including) the ninth year, thereafter the savings will decrease by $150 until (and including) the 16th year. Using equivalent uniform annual worth, is this machine economical? Assume a MARR of 9%.

This machine is not economical. A further explanation is provided below.

Explanation:

Given:

First cost,

= $20,000

Saving,

= $1500

Increase by,

= $200

Decrease by,

= $150

Now,

The EUAW will be:

=

=

=

= ($) negative

Thus this machine is not economical.

the answer is "b.the increased supply will create a surplus. "

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