A forklift will last for only 2 more years. It costs $5,000 a year to maintain. For $20,000 you can buy a new lift that can last for 10 years and should require maintenance costs of only $2,000 a year. a. If the discount rate is 5% per year, should you replace the forklift? Equivalent annual cost of the new machine= Equivalent cost of owning and operating the new machine= b. If the discount rate is 10% per year, should you replace the forklift? Equivalent annual cost of the new machine= Equivalent cost of owning and operating the new machine=
A forklift will last for only 2 more years. It costs $5,000 a year to maintain. For $20,000 you can buy a new lift that can last for 10 years and should require maintenance costs of only $2,000 a year. a. If the discount rate is 5% per year, should you replace the forklift? Equivalent annual cost of the new machine= Equivalent cost of owning and operating the new machine= b. If the discount rate is 10% per year, should you replace the forklift? Equivalent annual cost of the new machine= Equivalent cost of owning and operating the new machine=
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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Problem 8-38 Replacement Decision (LO4)
A forklift will last for only 2 more years. It costs $5,000 a year to maintain. For $20,000 you can buy a new lift that can last for 10 years and should require maintenance costs of only $2,000 a year.
a. If the discount rate is 5% per year, should you replace the forklift?
Equivalent annual cost of the new machine=
Equivalent cost of owning and operating the new machine=
b. If the discount rate is 10% per year, should you replace the forklift?
Equivalent annual cost of the new machine=
Equivalent cost of owning and operating the new machine=
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