Appledale Dairy is considering upgrading an old ice-cream maker Upgrading is available at two levels. moderate and extensive Moderate upgrading costs $6,600 now and yields annual savings of $3,200 in the first year, $2,900 in the second year, $2.600 in the third year, and so on Extensive upgrading costs $12,550 and saves $7,900 in the first year The savings then decrease by 20 percent each year thereafter. If the upgraded ice-cream maker will last for seven years, which upgrading option is better? Use a present worth comparison Appledale's MARR is 8 percent Click the icon to view the table of compound interest factors for discrete compounding periods when i= 8% The present worth of the moderate upgrading option is and the present worth of the extensive upgrading option is upgrading option is better (Round to the nearest cent as needed) The
Appledale Dairy is considering upgrading an old ice-cream maker Upgrading is available at two levels. moderate and extensive Moderate upgrading costs $6,600 now and yields annual savings of $3,200 in the first year, $2,900 in the second year, $2.600 in the third year, and so on Extensive upgrading costs $12,550 and saves $7,900 in the first year The savings then decrease by 20 percent each year thereafter. If the upgraded ice-cream maker will last for seven years, which upgrading option is better? Use a present worth comparison Appledale's MARR is 8 percent Click the icon to view the table of compound interest factors for discrete compounding periods when i= 8% The present worth of the moderate upgrading option is and the present worth of the extensive upgrading option is upgrading option is better (Round to the nearest cent as needed) The
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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