Answered: The cost of money is 10% per year.…

The cost of money is 10% per year. Machine P Machine Q Initial cost, $ -35,000 -66,000 Annual cost, $/year - 20,000 - 15,000 Salvage value, $ Life, years 10,000 23,000 2 4

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 2BE

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Question

The capitalized cost of machine P is closest to:
a. $-35,405
b. $-97,840
c. $-354,050
d. $-708,095

The cost of money is 10% per year.
Machine P
Machine Q
Initial cost, $
-35,000
-66,000
Annual cost, $/year
- 20,000
- 15,000
Salvage value, $
Life, years
10,000
23,000
2
4

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