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The following costs are associated with two new peanut picker machines being considered for use: Data PIK-M-UP CARTER'S Life, Years 5 10 First Cost $130,000
The following costs are associated with two new peanut picker machines being considered for use:
Data | PIK-M-UP | CARTER'S |
Life, Years | 5 | 10 |
First Cost | $130,000 | $350,000 |
Salvage Value | $12,000 | $45,000 |
Benefit, Yearly | $67,000 | $82,000 |
M&O Cost, Yearly | $9,000 | $13,000 |
M&O Cost Gradient | $700 | $1,100 |
The company interest rate (MRR) is 15%. Th company will make a down payment of 25% of the forst cost for the Pik-M-Upand 15% of the first cost for Carter's. The loan will have an annual effective interest rate of 10% with annual payments. The length of the loan will be equal to the life of the machine. Recommend which machine to purchase
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