A 2-ton hydraulic press is needed to add to production. This equipment has an initial purchase and installation cost of $190,000. In addition, it has yearly operation costs of $1000 and maintenance costs of $1500. Each year we expect an additional $32,000 in revenue resulting from this purchase. The press is expected to have a salvage value of $20,000 at the end of its 10-year lifetime. Using an interest rate of 12%, what is the annual equivalent (AE) for the purchase of this equipment over its lifetime? If there is an annual loss enter the value as negative and if there is an annual profit enter the value as positive. (Chapter 6- Annual Equivalent Worth Analysis)

A 2-ton hydraulic press is needed to add to production. This equipment has an initial purchase and installation cost of $190,000. In addition, it has yearly operation costs of $1000 and maintenance costs of $1500. Each year we expect an additional $32,000 in revenue resulting from this purchase. The press is expected to have a salvage value of $20,000 at the end of its 10-year lifetime. Using an interest rate of 12%, what is the annual equivalent (AE) for the purchase of this equipment over its lifetime? If there is an annual loss enter the value as negative and if there is an annual profit enter the value as positive. (Chapter 6- Annual Equivalent Worth Analysis)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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