The Crockett Land Winery must replace its present grape-pressing equipment. The two alternatives are the Quik-Skwish and the Stomp-Master. The annual operating costs increase by 15% each year as the machines age. If the interest rate is 8%, what is the net present cost for the Quik-Skwish machine over the 10 year life of the Stomp-Master (assuming identical replacement)?

Correct Answer:

$813,869

I cannot seem to get this answer but it is the answer provided to me by my professor. Any help would be appreciated!

I dont mind Excel tables, if used I would like to see the functions that brought forth the values.

The Crockett Land Winery must replace its present grape-pressing equipment. The two alternatives are the Quik-Skwish and the Stomp-Master. The annual operating costs increase by 15% each year as the machines age. If the interest rate is 8%, what is the net present cost for the Quik-Skwish machine over the 10 year life of the Stomp-Master (assuming identical replacement)? machine over the 10 year life of the Stomp-Master First cost Annual operating costs Salvage value Useful life, in years Quick-Skwish $350,000 30,000 35,000 Stomp-Master $500,000 25,000 50,000 10 Your Answer: Correct Answer: $813,869