9. Two machinery alternatives are described below. Complete the table below, assuming an interest rate of 6% and a useful lifetime of 8 years. Alt. 1: The initial purchase price of the machine is $25,000. The salvage value at the end of the useful life will be $5000. Maintenance costs are $2000 for the first' year and remains same for the rest of the life. Alt.2 2: The machine is leased for an initial payment of $2000 plus annual payments of $3500. There is no salvage value. A maintenance contract is purchased for a single payment of $10,000 at the start of the lease period. It 2 PWB PWC NPW State selection criteria and make decision on what alt. to select?
9. Two machinery alternatives are described below. Complete the table below, assuming an interest rate of 6% and a useful lifetime of 8 years. Alt. 1: The initial purchase price of the machine is $25,000. The salvage value at the end of the useful life will be $5000. Maintenance costs are $2000 for the first' year and remains same for the rest of the life. Alt.2 2: The machine is leased for an initial payment of $2000 plus annual payments of $3500. There is no salvage value. A maintenance contract is purchased for a single payment of $10,000 at the start of the lease period. It 2 PWB PWC NPW State selection criteria and make decision on what alt. to select?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![9. Two machinery alternatives are described below. Complete the table below, assuming an interest rate of 6% and a useful lifetime of 8 years.
Alt. 1: The initial purchase price of the machine is $25,000. The salvage value at the end of the useful life will be $5000. Maintenance costs are
$2000 for the first year and remains same for the rest of the life.
Alt.2 2: The machine is leased for an initial payment of $2000 plus annual
payments of $3500. There is no salvage value. A maintenance contract is purchased for a single payment of $10,000 at the start of the
lease period.
Alt 2
PWB
PWC
NPW
State selection criteria and make decision on what alt. to select?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4891b3d2-4683-4f9c-89dc-4ae3b9918d63%2F1ee492ef-d0ec-4324-b872-57f20f5ddbdf%2Frs0z35i_processed.jpeg&w=3840&q=75)
Transcribed Image Text:9. Two machinery alternatives are described below. Complete the table below, assuming an interest rate of 6% and a useful lifetime of 8 years.
Alt. 1: The initial purchase price of the machine is $25,000. The salvage value at the end of the useful life will be $5000. Maintenance costs are
$2000 for the first year and remains same for the rest of the life.
Alt.2 2: The machine is leased for an initial payment of $2000 plus annual
payments of $3500. There is no salvage value. A maintenance contract is purchased for a single payment of $10,000 at the start of the
lease period.
Alt 2
PWB
PWC
NPW
State selection criteria and make decision on what alt. to select?
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