Question
You have been asked to evaluate two pieces of equipment and recommend which one to purchase for your plant. They have different useful lives and
You have been asked to evaluate two pieces of equipment and recommend which one to purchase for your plant. They have different useful lives and have the cash flows shown in the table. The salvage value for both options is assumed to be zero. Assume that both alternatives may be replaced at the end of their useful lives. For the analysis, you will be using a MARR of 8%. (a) What would be a good horizon to evaluate the options based on PW.
(b) For that horizon compare each alternative's PW.
(c) Compare each alternative's EAC.
Option A Year | Life 3 yrs. |Option B Purchase Annual O&M Purchase Annual O&M Year 0 -10,000 15000 2000 -2500 2750 -1000 1250 1500 -2000 4Step by Step Solution
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Financial Accounting
Authors: Charles Horngren, William Thomas, Walter Harrison, Greg Berberich, Catherine Seguin
5th Canadian edition
133472264, 978-0133446265, 133446263, 978-0133472264
