Machine “A” has a starting cost of $ 50,000 with an estimated period of 12 years and a salvage value of $ 14,000. Annual O&M costs are $ 6,000 the first year, $ 6,300 the second year, and so on. Another Alternative is machine “B” which has an initial cost of $ 30,000 and a recovery value of $ 3,000 at the end of the 12-year service period, the annual operating and maintenance expenses are $ 8,000 the first year, from $ 8,500 the second year and so on. Using an interest rate of 13% per year. Do a Present Value analysis, and determine the value of machine A
Machine “A” has a starting cost of $ 50,000 with an estimated period of 12 years and a salvage value of $ 14,000. Annual O&M costs are $ 6,000 the first year, $ 6,300 the second year, and so on. Another Alternative is machine “B” which has an initial cost of $ 30,000 and a recovery value of $ 3,000 at the end of the 12-year service period, the annual operating and maintenance expenses are $ 8,000 the first year, from $ 8,500 the second year and so on. Using an interest rate of 13% per year. Do a Present Value analysis, and determine the value of machine A
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Machine “A” has a starting cost of $ 50,000 with an estimated period of 12 years and a salvage value of $ 14,000. Annual O&M costs are $ 6,000 the first year, $ 6,300 the second year, and so on. Another Alternative is machine “B” which has an initial cost of $ 30,000 and a recovery value of $ 3,000 at the end of the 12-year service period, the annual operating and maintenance expenses are $ 8,000 the first year, from $ 8,500 the second year and so on. Using an interest rate of 13% per year. Do a Present Value analysis, and determine the value of machine A
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