Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Costs and revenues of 2 alternatives for a machine are given below. The annual discount rate is 25% and the annual inflation rate is 15%.
Costs and revenues of 2 alternatives for a machine are given below. The annual discount rate is 25% and the annual inflation rate is 15%. Accordingly, determine which alternative is economically feasible using the present worth method. Compound (combined) values of the related parameters should be used in calculations.
3. Costs and revenues of 2 alternatives for a machine are given below. The annual discount rate is 25% and the annual inflation rate is 15%. Accordingly, determine which alternative is economically feasible using the present worth method. Compound (combined) values of the related parameters should be used in calculations. (40 P) Initial investment cost Salvage value First year annual operation cost Annual increase rate of operation cost Annual revenue Annual change rate or amount of revenues Economic life Alternative-1 350,000 TL 25,000 TL 6,000 TL %5 (Real) 145,000 TL -500 TL 9 year Alternative-2 500,000 TL 30,000 TL 8.000 TL %18 130,000 TL -%3 (real) 10 year NOTE: In the rate values given in the questions, all values without "real" expression are "compound (combined)" valuesStep 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