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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
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 $220,000, an operating cost of $8,500 per quarter, and a salvage value of $50,000 after its 2-year life. Package L has a first cost of $170,000 with a lower operating cost of $3,900 per quarter and an estimated $27,000 salvage value after its 4-year life. Which package offers the lower present worth analysis at an interest rate of 8% per year, compounded quarterly? The present worth of package K is $1 and that of package L is $[ (Click to select) offers the lower present worth.
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