Q5) For the cash flows shown, determine which service alternative should be selected? Assume that the interest rate = 10% per year B A Initial cost, $ 300,000 600,000 Annual cost, $/year 30,000 Annual cost started at 22,000 year 4, $/year Extra cost every 6 40,000 years, S Cost started at year 4 10,000 to 8 Salvage value, $ 30,000 110,000 Life, Years 8 1- Capitalized cost (CC) of Alternative A: A) -493,766 B)-473,766 C) -482,010 D) -461,421 E) -453,730 2- Capitalizes cost (CC) of alternative B: A)-851,844 B)-920,056 C)-875,631 D)-951,844 E)-984,008 3- Which alternative will be selected on the basis of their capitalized cost analyses? Justify your answer.

Q5) For the cash flows shown, determine which service alternative should be selected? Assume that the interest rate = 10% per year B A Initial cost, $ 300,000 600,000 Annual cost, $/year 30,000 Annual cost started at 22,000 year 4, $/year Extra cost every 6 40,000 years, S Cost started at year 4 10,000 to 8 Salvage value, $ 30,000 110,000 Life, Years 8 1- Capitalized cost (CC) of Alternative A: A) -493,766 B)-473,766 C) -482,010 D) -461,421 E) -453,730 2- Capitalizes cost (CC) of alternative B: A)-851,844 B)-920,056 C)-875,631 D)-951,844 E)-984,008 3- Which alternative will be selected on the basis of their capitalized cost analyses? Justify your answer.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EA: Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in...

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