A company that manufactures amplified pressure transducers wishes to decide between the machines shown - variable speed (VS) and dual speed (DS). Determine the range of Ai*, incremental ROR. (i.e. 5%-6%). First cost, $ AOC, $ per year Overhaul in year 3, $ Overhaul in year 4, $ Salvage value, $ Life, years Vs -260,000 -230,000 -40,000 55,000 6 O a. Ai* vs-Ds = 19% - 20% O b. Ai* vs.Ds = 10%-11% O c. Ai* vs-Ds = 4%-5% O d. Ai* vs-Ds = 17%-18% DS -215,000 -235,000 -24,000 14,000 6

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A company that manufactures amplified pressure transducers wishes to decide between the machines shown - variable speed (VS) and dual speed (DS). Determine the range of Ai*,
incremental ROR. (i.e. 5%-6%).
First cost, $
AOC, $ per year
Overhaul in year 3, $
Overhaul in year 4, $
Salvage value, $
Life, years
Vs
-260,000
-230,000
-40,000
55,000
6
a. Ai*vs-ds
19% - 20%
O b. Ai* vs.Ds = 10%-11%
OC.Ai*
*VS-Ds = 4%-5%
O d. Ai* vs-Ds = 17% -18%
VS-DS
DS
-215,000
-235,000
-24,000
14,000
6
Transcribed Image Text:A company that manufactures amplified pressure transducers wishes to decide between the machines shown - variable speed (VS) and dual speed (DS). Determine the range of Ai*, incremental ROR. (i.e. 5%-6%). First cost, $ AOC, $ per year Overhaul in year 3, $ Overhaul in year 4, $ Salvage value, $ Life, years Vs -260,000 -230,000 -40,000 55,000 6 a. Ai*vs-ds 19% - 20% O b. Ai* vs.Ds = 10%-11% OC.Ai* *VS-Ds = 4%-5% O d. Ai* vs-Ds = 17% -18% VS-DS DS -215,000 -235,000 -24,000 14,000 6
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