Problem 2.2
A company bought a milling machine for $ 100,000. The company intends to use the machine for the next 5 years. The machine is expected to save the company $ 42,000 during the first year of operation. Thereafter annual savings are expected to decrease 3% each year due to maintenance costs. Assuming 4,000 hours of operation per year and that the machine will have no “Salvage Value” at the end of the 5 years, determine the equivalent savings per hour of operation at 14% compounded annually.