The LJB Company must replace a freezer and is trying to decide between the following two alternatives: Item Freezer A Freezer B Investment required (29,000) (25,000) Annual electrical bill (3,000) (4,000) Salvage value 6,000 5,000 Project life in years 11 11 The LJB Company’s cost of capital is 8 percent. Which investment provides LJB with the lowest total cost
The LJB Company must replace a freezer and is trying to decide between the following two alternatives: Item Freezer A Freezer B Investment required (29,000) (25,000) Annual electrical bill (3,000) (4,000) Salvage value 6,000 5,000 Project life in years 11 11 The LJB Company’s cost of capital is 8 percent. Which investment provides LJB with the lowest total cost
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section10.A: Mutually Exclusive Investments Having Unequal Lives
Problem 2P
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The LJB Company must replace a freezer and is trying to decide between the following two alternatives:
Item Freezer A Freezer B
Investment required (29,000) (25,000)
Annual electrical bill (3,000) (4,000)
Salvage value 6,000 5,000
Project life in years 11 11
The LJB Company’s cost of capital is 8 percent. Which investment provides LJB with the lowest total cost?
Transcribed Image Text:#9
The UB Company must replace a freezer and is trying to decide between the following two alternatives:
| is
Item
Investment required
Freezer A
Freezer B
(29,000)
(25,000)
Annual electrical bill
(3,000)
(4,000)
Salvage value
6,000
5,000
Project life in years
11
11
The UB Company's cost of capital is 8 percent. Which investment provides UB with the lowest total cost?
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