Compute the present equivalent cost of a machine tool that costs $10,000 initially plus $500 for maintenance every year. The estimated life of the tool is twenty years and its estimated salvage value at that time is $3000. Interest rate is 12%. A) $13,400 B) $13,700 C) $15,000 D) $17,000
Compute the present equivalent cost of a machine tool that costs $10,000 initially plus $500 for maintenance every year. The estimated life of the tool is twenty years and its estimated salvage value at that time is $3000. Interest rate is 12%. A) $13,400 B) $13,700 C) $15,000 D) $17,000
Chapter9: Capital Budgeting And Cash Flow Analysis
Section9.A: Depreciation
Problem 2P
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Compute the present equivalent cost of a machine tool that costs $10,000 initially plus $500 for maintenance every year. The estimated life of the tool is twenty years and its estimated salvage value at that time is $3000. Interest rate is 12%.
A) $13,400
B) $13,700
C) $15,000
D) $17,000
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