pment A has an initial cost of $5000.00, an annual maintenance cost of $300.00, and a salvage value of $800.00 after 5 years. Equipment B has an initial cost of $7000.00, an annual maintenance cost of $400.00, lasts for 10 years and has no salvage value. If the interest rate is 6%: a)  Equipment A should be purchased. b)  Equipment B should be purchased. c)  No equipment should be purchased. d)  There is no difference in choosing between A or B

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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8- The life of a project is 10 years. An equipment is needed for this project. Two alternatives are available. Equipment A has an initial cost of $5000.00, an annual maintenance cost of $300.00, and a salvage value of $800.00 after 5 years. Equipment B has an initial cost of $7000.00, an annual maintenance cost of $400.00, lasts for 10 years and has no salvage value. If the interest rate is 6%:

  1. a)  Equipment A should be purchased.

  2. b)  Equipment B should be purchased.

  3. c)  No equipment should be purchased.

  4. d)  There is no difference in choosing between A or B.

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