Question
The following table is used to make a replacement decision regarding a piece of engineering equipment Year Salvage value Maintenance costs EAC Capital costs EAC
The following table is used to make a replacement decision regarding a piece of engineering equipment
| Year | Salvage value | Maintenance costs | EAC Capital costs | EAC maintenance costs | Total |
| 1 | $32,000 | $4,000 | $38,416 | $4,000 | $42,416 |
| 2 | 15,031 | 8,000 | 30,889 | 5,923 | 36,812 |
| 3 | 7,065 | 16,000 | 24,226 | 9,027 | 33,253 |
| 4 | 3,320 | 32,000 | 19,813 | 14,125 | 33,938 |
| 5 | 1,561 | 64,000 | 16,746 | 22,627 | 39,373 |
If the minimum acceptable rate of return is 8.0%, what is the purchase price of this equipment?
Question options:
|
| $70,416 |
|
| $65,200 |
|
| $6,416 |
|
| $69,045 |
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Personal Finance
Authors: Thomas Garman, Raymond Forgue
12th edition
9781305176409, 1133595839, 1305176405, 978-1133595830
