Q. 4 For the cash flows shown, use the capitalized cost analyses and aninterest rate of 8% per year and determine which service alternativeshould be selected.Initial cost, $200000480000Annual cost, $/year3000040000Extra cost every 6 years, $30000Salvage value, $• 4000070000Life, Years8.00Capitalized cost (CC) of Alternative A:Capitalizes cost (CC) of alternative B:Which alternative should be selected on the basis of theircapitalized cost analyses?

Annual Worth is defined as the the equivalent uniform annual worth of all the estimated income and…

Answered: For the cash flows shown, use the…

For the cash flows shown, use the capitalized cost analyses and an interest rate of 8% per year and determine which service alternative should be selected.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

Q. 4

For the cash flows shown, use the capitalized cost analyses and an
interest rate of 8% per year and determine which service alternative
should be selected.
Initial cost, $
200000
480000
Annual cost, $/year
30000
40000
Extra cost every 6 years, $
30000
Salvage value, $
• 40000
70000
Life, Years
8.
00
Capitalized cost (CC) of Alternative A:
Capitalizes cost (CC) of alternative B:
Which alternative should be selected on the basis of their
capitalized cost analyses?

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