ABC Brand XYZ Brand Purchase price S Life in years Salvage value S Annual maintenance $ 1900 6200 10 10 None None 170 310 Efficiency % 80 90

Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter15: Capital Investment Analysis
Section: Chapter Questions
Problem 15.1.1MBA
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Two 100 horsepower motors are being considered for use: If power costs $0.10 per kWh, and if the interest rate is 12%, how many hours of operation per year is required to justify the purchase of XYZ brand motor? (1 hp = 0.746 kW). Which motor would you select if the motor is expected to operate 2,000 hours per year? Explain why.

ABC Brand XYZ Brand
Purchase price S
Life in years
Salvage value S
Annual maintenance $
1900
6200
10
10
None
None
170
310
Efficiency %
80
90
Transcribed Image Text:ABC Brand XYZ Brand Purchase price S Life in years Salvage value S Annual maintenance $ 1900 6200 10 10 None None 170 310 Efficiency % 80 90
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