A new equipment is being considered at a local company at a cost of $200,000. The operation and maintenance costs of this equipment are estimated to be about $20,000 per year. Salvage value is expected to be $40,000 at the end of its useful life. The life of this equipment is estimated to vary anywhere from 5 to 9 years with the associated probablities as shown in the table below. If an interest rate of 10% is used, what is the expected EUAC for this equipment?
What is the standard deviation of the equipment life ?
Life,Years 5 6 7 8 9
Probablitity 0.3 0.1 0.15 0.20 0.25