Question
You and your partner have become very interested in cross-country motorcycle racing andwish to purchase entry-level equipment. You have identified two alternative sets ofequipment and
You and your partner have become very interested in cross-country motorcycle racing andwish to purchase entry-level equipment. You have identified two alternative sets ofequipment and gear. Package K has a first cost of $200,000, an operating cost of $9,000perquarter, and a salvage value of $30,000 after its 2-year life. Package L has a first cost of$260,000 with a lower operating cost of $3,000per quarterand an estimated $20,000salvage value after its 4-year life. Which package offers the lower present worth analysis atan interest rate of 12% per year, compounded quarterly?
The present worth of package K is $___and that of package L is $____.
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