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Please use excel and demonstrate the formulae used.A medium-sized industrial grade compressor can be purchased for$35,000. Annual O&M costs are expected to increase $1,300 everyyear, with a 1st year O&M cost of $2,000. (MARR = 16%, andplanning horizon is 10 years)The compressor salvage value for a given periodt, is calculated based on the followingequation: Salvage value (t) = $30,000– $3,000 * ta) Find the Optimum Replacement Interval for this Equipmentb) Find the Optimum Replacement Interval for this Equipment if theO&M costs is increased to $1,600/yr. What is yourconclusion?c) Find the Optimum Replacement Interval for this Equipment if theinitial cost is reduced to $32,000. What is your conclusion?
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