Question
You and your partner have become very interested in cross-country motorcycle racing and wish to purchase entry-level equipment. You have identified two alternative sets of
You and your partner have become very interested in cross-country motorcycle racing and wish to purchase entry-level equipment. You have identified two alternative sets of equipment and gear. Package K has a first cost of $130,000, an operating cost of $8,500 per quarter, and a salvage value of $60,000 after its 2-year life. Package L has a first cost of $210,000 with a lower operating cost of $3,400 per quarter and an estimated $23,000 salvage value after its 4-year life. Which package offers the lower present worth analysis at an interest rate of 20% per year, compounded quarterly? The present worth of package K is $____ and that of package L is $___ . Which one offers the lower present worth? (please show all work for each step).
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