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Make a cost comparison in Excel of the following assets (a) by the annual-cost method. (b) by the present-value method. Use a .1 to
Make a cost comparison in Excel of the following assets (a) by the annual-cost method. (b) by the present-value method. Use a .1 to 15% interest rate. (c) Make a table in Excel comparing Interest, Annual Cost,, and Present Value. (d) Make a Chart in Excel of Results in c (e) Analyze the results of c and d Basic Formulas: Annual Cost Factor = i/(1-(1+i)") Present Value F (1+i) Present Value Factor= (1-(1+i)")/ Annual Cost = ((First cost-Salvage value) [i/(1-(1+i)")])+ ((Salvage value)(i)) +Operating cost) PV (First cost-Salvage value) [(1+i) + (1+i)2 + (1+i)]+[(1-(1+i))/ i] (Operating Cost) +(Salvage value)((1+i)) Machine A Machine B First cost Salvage value 12000 13600 (%) Machine A AC(S) PV($) Machine B AC($) PV($) 1500 0.1 2658 62993 2404 57068 Life in years 6 8 1 2727 57926 2477 52628 Operating cost 900 700 3 2883 48830 2637 44666 Interest Rate 0.07 0.07 5 3044 41999 2804 38694 Solutions (a and b) 7 3208 36792 2978 34151 9 3376 32766 3157 30645 Machines A & B Annual Cost= Annual Cost Ration 1.077 3547 3208 2978 13 3722 15 3899 11 29610 3343 27906 27104 3534 25738 25088 3731 24003 Pres Value Cost 36792 34151 Pres Value Ratio= 1.077
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