Problem A contractor is considering the following three alternatives: a. Purchase a new microcomputer system for $15,000. The system is expected to last 6 years with salvage value of $1,000. b. Lease a new microcomputer system for $3,000 per year, payable in advance. The system should last 6 years. c. Purchase a used microcomputer system for $8,200. It is expected to last 3 years with no salvage value. Use a common-multiple-of-lives approach. If MARR of 8% is used, which alternative should be selected using a discounted present worth analysis? If the MARR is 12%, which alternate should be selected?
Problem A contractor is considering the following three alternatives: a. Purchase a new microcomputer system for $15,000. The system is expected to last 6 years with salvage value of $1,000. b. Lease a new microcomputer system for $3,000 per year, payable in advance. The system should last 6 years. c. Purchase a used microcomputer system for $8,200. It is expected to last 3 years with no salvage value. Use a common-multiple-of-lives approach. If MARR of 8% is used, which alternative should be selected using a discounted present worth analysis? If the MARR is 12%, which alternate should be selected?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![Problem 9
A contractor is considering the following three alternatives:
a. Purchase a new microcomputer system for $15,000. The system is expected to last
6 years with salvage value of $1,000.
b. Lease a new microcomputer system for $3,000 per year, payable in advance. The
system should last 6 years.
c. Purchase a used microcomputer system for $8,200. It is expected to last 3
with no salvage value.
Use a common-multiple-of-lives approach. If MARR of 8% is used, which
alternative should be selected using a discounted present worth analysis? If the
MARR is 12%, which alternate should be selected?
years](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9c4f7ca3-11a8-4d7c-82b0-e0a5dbf2742b%2Ff26f0f74-8c03-470c-a720-200cbffb88f1%2Fo65mr4_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 9
A contractor is considering the following three alternatives:
a. Purchase a new microcomputer system for $15,000. The system is expected to last
6 years with salvage value of $1,000.
b. Lease a new microcomputer system for $3,000 per year, payable in advance. The
system should last 6 years.
c. Purchase a used microcomputer system for $8,200. It is expected to last 3
with no salvage value.
Use a common-multiple-of-lives approach. If MARR of 8% is used, which
alternative should be selected using a discounted present worth analysis? If the
MARR is 12%, which alternate should be selected?
years
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