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Consider the two options of new equipment whose life is 20 years and the interest rate is 10% per year. 1. Represent the cash flow

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Consider the two options of new equipment whose life is 20 years and the interest rate is 10% per year. 1. Represent the cash flow diagrams for the two options Option A Investment of S 110.000 with no salvage value Annual maintenance cost of $ 35,000 per year Operating costs are: $ 210,000 per year in year 1 Increasing by S 10,000 per year until year 10 Constant at $ 300,000 per year until year 20. Option B Investment of S 700,000 with a salvage value of $ 300,000 Annual maintenance cost of $ 21,000 per year Operating costs are: . S 157,500 per year in year 1 Increasing by $ 7,500 per year until year 10 . Constant at $ 225,000 per year until year 20. . . 2. Which option do you recommend? Justify your answer using the Present worth analysis method to se worth and show all details). Consider the two options of new equipment whose life is 20 years and the interest rate is 10% per year. 1. Represent the cash flow diagrams for the two options Option A Investment of S 110.000 with no salvage value Annual maintenance cost of $ 35,000 per year Operating costs are: $ 210,000 per year in year 1 Increasing by S 10,000 per year until year 10 Constant at $ 300,000 per year until year 20. Option B Investment of S 700,000 with a salvage value of $ 300,000 Annual maintenance cost of $ 21,000 per year Operating costs are: . S 157,500 per year in year 1 Increasing by $ 7,500 per year until year 10 . Constant at $ 225,000 per year until year 20. . . 2. Which option do you recommend? Justify your answer using the Present worth analysis method to se worth and show all details)

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