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asap please 25 years A company is considering the purchase of either machine A or machine B. Machine A Machine B initial cost 80,000 100,000
asap please
25 years A company is considering the purchase of either machine A or machine B. Machine A Machine B initial cost 80,000 100,000 estimated life 20 year salvage value 20,000 25,000 other costs 18,000 per year 15,000 per year for the first 15 years and 20,000 per year for the next 10 years a) The interest rate is 10%, and all cash flows may be treated as end-of-year cash flows. Assume that equivalent annual cost is the value of the constant annuity equal to the total cost of a project. What will be the equivalent annual cost of machine B? b) If funds equal to the present worth of the cost of purchasing and using machine A over 20 years were invested at 10% per annum, what will be the value of the investment at the end of 20 years . Page 1 c) How much money would have to be placed in a sinking fund each year to replace machine B at the end of 25 years if the fund yields 10% annual compound interest and if the first cost of the machine is assumed to increase at a 6% annual compound rate? (Assume the salvage value does not change.)Step by Step Solution
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