Saudi Farming wants to use Tractors. Two models are available: Model A: Initial cost 80,000, Annual maintenance: 3000; Useful life : 3 years; Salvage value :10,000 Model B: Initial cost 120,000, Annual maintenance: 2000; Useful life : 6 years; Salvage value :15,000 Assuming that both models will be available with identical cost for at least 20 years. MARR for the company is 10%. Using annual equivalence method, what would be the annual cost saving if Model B is used compared to Model A? 5,538.9 4,812.4 3,539.6 4,539.3

Saudi Farming wants to use Tractors. Two models are available: Model A: Initial cost 80,000, Annual maintenance: 3000; Useful life : 3 years; Salvage value :10,000 Model B: Initial cost 120,000, Annual maintenance: 2000; Useful life : 6 years; Salvage value :15,000 Assuming that both models will be available with identical cost for at least 20 years. MARR for the company is 10%. Using annual equivalence method, what would be the annual cost saving if Model B is used compared to Model A? 5,538.9 4,812.4 3,539.6 4,539.3

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 5MAD: Home Garden Inc. is considering the construction of a distribution warehouse in West Virginia to...

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