Compare the alternatives below on the basis of their capitalized costs with adjustments made for inflation. Use i =12% per year and f = 3% per year. Alternative X Y First cost, $ −18,500,000 −9,000,000 AOC, $ per year −25,000 −10,000 Salvage value, $ 105,000 82,000 Life, years ∞ 10
Compare the alternatives below on the basis of their capitalized costs with adjustments made for inflation. Use i =12% per year and f = 3% per year. Alternative X Y First cost, $ −18,500,000 −9,000,000 AOC, $ per year −25,000 −10,000 Salvage value, $ 105,000 82,000 Life, years ∞ 10
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 18EA: Consolidated Aluminum is considering the purchase of a new machine that will cost $308,000 and...
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Compare the alternatives below on the basis of
their capitalized costs with adjustments made for
inflation. Use i =12% per year and f = 3% per year.
Alternative X Y
First cost, $ −18,500,000 −9,000,000
AOC, $ per year −25,000 −10,000
Salvage value, $ 105,000 82,000
Life, years ∞ 10
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