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Please help me answer this question! I will give a good review right away! Please neatly show work, Do not use excel as I do
Please help me answer this question! I will give a good review right away! Please neatly show work, Do not use excel as I do not understand it, and box the answer. Thank you very much!
The factory manager is considering the following two quotes from two vendors for purchace and maintanance of an equipment. Vendor X's estimates are all in actual dollars, while Vendor Y's estimates are all in year-zero dollars. Initial cost Annual cost Service life (yrs) Salvage value Vendor X $9,300 $3,900 10 $3,720 Vendor Y $11,200 $3,000 10 $4,480 The manager uses a before-tax real interest rate of 10% per year for economic analysis. If inflation rate is expected to average 1.82% per year over the next ten years, which vendor should the manager select that will minimize the before-tax cost of ownwership? (a) Calculate PW for each alternative (use negative sign for costs) The PW of Vendor X's estimates is $ (Round to the nearest whole number.) The PW of Vendor Y's estimates is $ (Round to the nearest whole number.) (b) The most economical alternative is A. Vendor Y B. Vendor XStep by Step Solution
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