A manual stamping machine currently valued at Rs. 1000/- is expected to last 2 years and costs Rs 4000/- per year to operate. An automatic stamping machine, which can be purchased for Rs. 3000/-, which last for 4 years and can be operated at an annual cost of Rs. 3000/-. If money carries the rate of interest 10 % per annum, determine which stamping machine is to be purchased?

A manual stamping machine currently valued at Rs. 1000/- is expected to last 2 years and costs Rs 4000/- per year to operate. An automatic stamping machine, which can be purchased for Rs. 3000/-, which last for 4 years and can be operated at an annual cost of Rs. 3000/-. If money carries the rate of interest 10 % per annum, determine which stamping machine is to be purchased?

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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Question

A manual stamping machine currently valued at Rs. 1000/- is expected to last 2 years and costs
Rs 4000/- per year to operate. An automatic stamping machine, which can be purchased for
Rs. 3000/-, which last for 4 years and can be operated at an annual cost of Rs. 3000/-. If money carries
the rate of interest 10 % per annum, determine which stamping machine is to be purchased?

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