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North City must choose between two new snow-removal machines. The SuperBlower has a $79,000 initial cost, a 20-year life, and an $5,000 salvage value. At
North City must choose between two new snow-removal machines. The SuperBlower has a $79,000 initial cost, a 20-year life, and an $5,000 salvage value. At the end of 10 years, it will need a major overhaul costing $16,000. Annual maintenance and operating costs are $8,000. The Sno-Mover will cost $44,000, has an expected life of 10 years, and has no salvage value. The annual maintenance and operating costs are expected to be $10,000. Using a 12% interest rate, which machine should be chosen? Assume Sno-Mover can be purchased again with the same costs. Enter the annual equivalent cost (AEC) as a positive number of the snow-removal machine that should be purchased." 100502.2000 17787.3 (with margin: 177.87)
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