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You are about to buy a piece of equipment (machine Alpha) for a project. The initial cost is $200,000 and the annual maintenance costs is
You are about to buy a piece of equipment (machine Alpha) for a project. The initial cost is $200,000 and the annual maintenance costs is $15,000. Another company offers you a second option (Machine Beta) for which the annual maintenance cost is $20,000. What is the maximum price (the initial cost) you would be willing to pay for the second option? Both machines have the same useful life of 5 years and the difference between their performances is negligible. Assume an annual interest rate of 10%. $181,050$175,000$225,000$168,100
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