A machinery with an initial cost of $330,000 and a service life of 7 years is being considered for purchase. Its estimated annual costs include labor costs of $55,000 per year and other operation and maintenance (O&M) costs of $30,000 per year. All the estimated costs are in today's dollars. The corresponding annual inflation rates are 5.66% for labor costs and 3.7% for O&M costs. The 3.7% is also the general inflation rate. Based on a market rate-of-return of 12%, and assuming zero salvage value at the end of its service life, answer the following two questions 1. The PW cost of this machinery is O A. $717,919 O B. $772,541 C. $804,502 D. $793,222 2. The EUAC of the machinery in real dollars is O A. $142,094 O B. $152,356 O C. $173,809 O D. $148,384

A machinery with an initial cost of $330,000 and a service life of 7 years is being considered for purchase. Its estimated annual costs include labor costs of $55,000 per year and other operation and maintenance (O&M) costs of $30,000 per year. All the estimated costs are in today's dollars. The corresponding annual inflation rates are 5.66% for labor costs and 3.7% for O&M costs. The 3.7% is also the general inflation rate. Based on a market rate-of-return of 12%, and assuming zero salvage value at the end of its service life, answer the following two questions 1. The PW cost of this machinery is O A. $717,919 O B. $772,541 C. $804,502 D. $793,222 2. The EUAC of the machinery in real dollars is O A. $142,094 O B. $152,356 O C. $173,809 O D. $148,384

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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