Material handling function is fundamental to any manufacturing or distribution system. In order to improve the productivity of a manufacturing system, the management decided to install a new tow line.
The tow line conveyor required length is 1200 ft., cost per foot = $25, installation cost per foot is 30% of purchase cost, and salvage value is 10% of purchase cost.
If service life of the conveyor is 15 years, what is annual (depreciation) cost ?