Answered step by step
Verified Expert Solution
Link Copied!

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%.

image text in transcribed

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)" values

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Options Futures And Other Derivatives

Authors: John C. Hull

4th Edition

0130224448, 9780130224446

More Books

Students also viewed these Finance questions

Question

Explain the characteristics of an effective appraisal system.

Answered: 1 week ago

Question

Describe the various performance appraisal methods.

Answered: 1 week ago

Question

Define performance appraisal.

Answered: 1 week ago