Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A precision lathe costs $30,000 and will cost $40,000 a year to operate and maintain. If the discount rate is 10% and the lathe will
A precision lathe costs $30,000 and will cost $40,000 a year to operate and maintain. If the discount rate is 10% and the lathe will last for 5 years, what is the equivalent annual cost of the tool? (Do not round intermediate calculations. Round your answer to 2 decimal places. Enter your answer as a positive value.) Equivalent annual cost The following are the cash flows of two independent projects: Year Project A Project B 0 $(210) $(210) 1 90 110 2 90 110 3 90 110 4 90 a. If the opportunity cost of capital is 12%, calculate the NPV for both projects. (Do not round intermediate calculations. Round your answers to 2 decimal places.) NPV Project Project A Project B b. Which of these projects is worth pursuing? O Project A Project B O Both Neither The following are the cash flows of two projects: Year Project A Project B 0 $ (270) $(270) 1 150 170 2 150 170 3 150 170 4 150 a. Calculate the NPV for both projects if the discount rate is 12%. (Do not round intermediate calculations. Round your answers to 2 decimal places.) NPV Project Project A Project B b. Suppose that you can choose only one of these projects. Which would you choose? O Project A O Project B O Neither
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started