Question
A certain Automatic testing operation can be performed by either Unit X or Unit Y. Unit X has a first cost of $16,000 and a
A certain Automatic testing operation can be performed by either Unit X or Unit Y. Unit X has a first cost of $16,000 and a $2000 salvage value. Annual disbursements are expected to be $9000 in year 1, $9030 in year 2 and to increase by $30 each year thereafter. Unit Y has first cost of $24,000 and a salvage value of $3000. Annual disbursements are expected to be uniform $7000 each year. If unit Y is chosen, additional annual income taxes will be $520 in year1, $532 in year2 and will increase by $12 each year thereafter. Each unit has an estimated life of 10 years. Find the comparative equivalent uniform annual costs for each unit using interest rate of 10% after income taxes.
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