Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The following data applies that A company is considering the purchase A or machine B. 3) of either machine Initial cost Estimated life Salvage value
The following data applies that A company is considering the purchase A or machine B. 3) of either machine Initial cost Estimated life Salvage value Other costs $80,000 20 years $20,000 $100,000 25 years $25,000 $15,000 per year for the first 15years and $20,000 per year for the next 10years $18,000 per year The interest rate is 10%, and all cash flows may be treated as end-of-year cash flows. Assume that equivalent annual cost is the value of the constant annuity equal to the total cost of a project. The equivalent annual cost of machine B is? b. If funds equal to the present worth of the cost of purchasing and using machine A over 20 years were invested at 10% per annum, the value of the investment at the end of 20 years would be most nearly? How much money would have to be placed in a sinking fund each year to replace machine B at the end of 25 years if the fund yields 10% annual compound interest and if the first cost of the machine is assumed to increase at a 6% annual compound rate? (Assume the salvage value does not change.). c
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started