4. An industrial firm can purchase a special machine for $70,000. A down payment of $5,000 is required, and the unpaid balance can be paid off in five equal year-endinstallments at 9% interest. As an alternative, the machine can be purchased for $66,000 in cash. If the firm's MARR is 10%, use the annual equivalent method todetermine which alternative should be accepted.66 Click the icon to view the interest factors for discrete compounding when i= 9% per year.7 Click the icon to view the interest factors for discrete compounding when MARR = 10% per year.The annual equivalent worth of the first option is $(Round to the nearest dollar.)The annual equivalent worth of the second option is $(Round to the nearest dollar.)Select the correct choice from the drop-down menu below.(1).is a better choice.6: More InfoSingle PaymentEqual Payment SeriesCompoundPresentCompoundSinkingPresentCapitalAmountWorthAmountFundWorthRecoveryFactorFactorFactorFactorFactorFactor(F/P, i, N)(P/F, i, N)(F/A, i, N)(A/F, i, N)(PIA, I, N)(A/P, i, N)11.09000.91741.00001.00000.91741.09001.18810.84172.09000.47851.75910.568531.29500.77223.27810.30512.53130.395141.41160.70844.57310.21873.23970.30871.53860.64995.98470.16713.88970.25711.67710.59637.52330.13294.48590.222971.82800.54709,20040.10875.03300.198781.99260,501911,02850,09075.53480,18072.17190.460413.02100,07685.99520.1668102.36740.422415.19290.06586.41770.1558 Single PaymentEqual Payment SeriesCompoundPresentCompoundAmountSinkingPresentCapitalAmountWorthFundWorthRecoveryFactorFactorFactorFactorFactorFactor(F/P, i, N)(P/F, i, N)(F/A, i, N)(A/F, i, N)(P/A, i, N)(A/P, i, N)11.10000.90911.00001.00000.90911.10001.21000.82642.10000.47621.73550.576231.33100.75133.31000.30212.48690.402141.46410.68304.64100.21553.16990.31551.61050.62096.10510.16383.79080.263861.77160.56457.71560.12964.35530.229671.94870.51329.48720.10544.86840.205482.14360.466511.43590.08745.33490.18742.35790.424113.57950.07365.75900.1736102.59370.385515.93740.06276.14460.1627(1) O Option 2Option 1

Given: MARR=10% First Alternative: $70000, down payment=$5000 Second Alternative: $66000

An industrial firm can purchase a special machine for $70,000. A down payment of $5,000 is required, and the unpaid balance can be paid off in five equal year-end installments at 9% interest. As an alternative, the machine can be purchased for $66,000 in cash. If the firm's MARR is 10%, use the annual equivalent method to determine which alternative should be accepted. 6 Click the icon to view the interest factors for discrete compounding when i= 9% per year. 7 Click the icon to view the interest factors for discrete compounding when MARR = 10% per year. The annual equivalent worth of the first option is $ (Round to the nearest dollar.) The annual equivalent worth of the second option is $ 1. (Round to the nearest dollar.) Select the correct choice from the drop-down menu below. (1). is a better choice. 6: More Info

An industrial firm can purchase a special machine for $70,000. A down payment of $5,000 is required, and the unpaid balance can be paid off in five equal year-end installments at 9% interest. As an alternative, the machine can be purchased for $66,000 in cash. If the firm's MARR is 10%, use the annual equivalent method to determine which alternative should be accepted. 6 Click the icon to view the interest factors for discrete compounding when i= 9% per year. 7 Click the icon to view the interest factors for discrete compounding when MARR = 10% per year. The annual equivalent worth of the first option is $ (Round to the nearest dollar.) The annual equivalent worth of the second option is $ 1. (Round to the nearest dollar.) Select the correct choice from the drop-down menu below. (1). is a better choice. 6: More Info

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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