A small metal plating company wants to become involved in electronic commerce. A modest e-commerce package is available for $55.000. Semi-annual updates and site maintenance will cost $800. The salvage value of the package is estimated to be $5,000 after 3 years. If the company wants to recover its total cost in 3 years, what is the equivalent semi-annual amount of new income that must be realized at an interest rate of 5% per 6-month period? O$11,115 per semiannual period O $6.215 per semiannual period O $12,105 per semiannual period O $8.645 per semiannual period

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Chapter1: Making Economics Decisions
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A small metal plating company wants to become involved in electronic commerce. A
modest e-commerce package is available for $55,000. Semi-annual updates and site
maintenance will cost $800. The salvage value of the package is estimated to be
$5,000 after 3 years. If the company wants to recover its total cost in 3 years, what is
the equivalent semi-annual amount of new income that must be realized at an
interest rate of 5% per 6-month period?
$11,115 per semiannual period
O $6.215 per semiannual period
O $12,105 per semiannual period
O $8,645 per semiannual period
O $10,901 per semiannual period
A major repair on the suspension system of Jane's 3-year old car will cost her $3,000
every 3 years henceforth (i.e., years 3, 6, and 9) because the warranty expired after 2
years of ownership. Also, she will spend $600 every 2 years (i.e., years 2, 4, 6, 8 and
10) for maintenance now that the warranty is over until she donates the car to
charity in year 10. Use these costs to determine Jane's equivalent annual cost for
years 1 through 10 at i - 8% per year.
O $-1,004 per year
O-$1,184 per year
O S-1,192 per year
OS-1,111 per year
O-$1,149 per year
Transcribed Image Text:A small metal plating company wants to become involved in electronic commerce. A modest e-commerce package is available for $55,000. Semi-annual updates and site maintenance will cost $800. The salvage value of the package is estimated to be $5,000 after 3 years. If the company wants to recover its total cost in 3 years, what is the equivalent semi-annual amount of new income that must be realized at an interest rate of 5% per 6-month period? $11,115 per semiannual period O $6.215 per semiannual period O $12,105 per semiannual period O $8,645 per semiannual period O $10,901 per semiannual period A major repair on the suspension system of Jane's 3-year old car will cost her $3,000 every 3 years henceforth (i.e., years 3, 6, and 9) because the warranty expired after 2 years of ownership. Also, she will spend $600 every 2 years (i.e., years 2, 4, 6, 8 and 10) for maintenance now that the warranty is over until she donates the car to charity in year 10. Use these costs to determine Jane's equivalent annual cost for years 1 through 10 at i - 8% per year. O $-1,004 per year O-$1,184 per year O S-1,192 per year OS-1,111 per year O-$1,149 per year
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