A company with a MARR =10% will use a Uniform Cash Flow Analysis to decide which of two machines to install in a plant. Neither machine has a salvage value. The machines have different lives. Like replacement will be assumed, BUT THE PROJECT WILL TERMINATE in 8 years. The cash flow for one cycle of each machine is shown below. First Cost Annual Benefits Life MACHINE A $75,000 $35,000 5 years MACHINE B $95,000 $42,000 6 years When the company performs the EQUIVALENT ANNUAL CASH FLOW ANALYSIS for the 8 years, the EUA(B-C) for MACHINE A will be closest to:
A company with a MARR =10% will use a Uniform Cash Flow Analysis to decide which of two machines to install in a plant. Neither machine has a salvage value. The machines have different lives. Like replacement will be assumed, BUT THE PROJECT WILL TERMINATE in 8 years. The cash flow for one cycle of each machine is shown below. First Cost Annual Benefits Life MACHINE A $75,000 $35,000 5 years MACHINE B $95,000 $42,000 6 years When the company performs the EQUIVALENT ANNUAL CASH FLOW ANALYSIS for the 8 years, the EUA(B-C) for MACHINE A will be closest to:
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
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:A company with a MARR =10% will use a Uniform Cash Flow Analysis to decide which of two machines to install in a plant. Neither machine has a salvage value. The machines have different
lives. Like replacement will be assumed, BUT THE PROJECT WILL TERMINATE in 8 years. The cash flow for one cycle of each machine is shown below.
МАCHINE B
$95,000
$42,000
6 years
МАСCHINE A
$75,000
$35,000
5 years
First Cost
Annual Benefits
Life
When the company performs the EQUIVALENT ANNUAL CASH FLOW ANALYSIS for the 8 years, the EUA(B-C) for MACHINE A will be closest to:
O a. $8,240
O b. $10,650
O c. $12,220
d. $15,210
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