3- Use a 10-year analysis period and a 10% interest rate to determine which alternative should be selected: First Cost Uniform Annual Benefit Useful life, in years A $6500 $1800 5 B $12000 $2000 10
3- Use a 10-year analysis period and a 10% interest rate to determine which alternative should be selected: First Cost Uniform Annual Benefit Useful life, in years A $6500 $1800 5 B $12000 $2000 10
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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help with 3&4
![3 - Use a 10-year analysis period and a 10% interest rate to determine which
alternative should be selected:
First Cost
Uniform Annual Benefit
Useful life, in years
A
$6500
$1800
5
First Cost
Annual O&MO
Salvage Value
Overhaul (Year 6)
Life in years
4 - Which equipment is preferred using PW analysis if the firm's interest rate is
15%? In PW terms how great is the difference?
B
$12000
$2000
10
A
$45000
$3900
$0
$10000
10
B
$35000
$4200
$5000
$0
5](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8d72c397-8d87-4c64-9701-73bef24093e7%2F62309592-3e5d-43ff-bd47-3c223e7c74ee%2Fy937l6i_processed.png&w=3840&q=75)
Transcribed Image Text:3 - Use a 10-year analysis period and a 10% interest rate to determine which
alternative should be selected:
First Cost
Uniform Annual Benefit
Useful life, in years
A
$6500
$1800
5
First Cost
Annual O&MO
Salvage Value
Overhaul (Year 6)
Life in years
4 - Which equipment is preferred using PW analysis if the firm's interest rate is
15%? In PW terms how great is the difference?
B
$12000
$2000
10
A
$45000
$3900
$0
$10000
10
B
$35000
$4200
$5000
$0
5
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