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choice between a John-Deere-XP tractor and a Sun ctor. Bob has a MARR of 5%. hn-Deere-XP: First Cost: $150,000. Life: 10 years, zero salvage value 10 years. Annual Expense (maintenance, c c.): $3,000. unflower-FT First Cost: $200,000. Life: 15 years, zero salvage value

choice between a John-Deere-XP tractor and a Sun ctor. Bob has a MARR of 5%. hn-Deere-XP: First Cost: $150,000. Life: 10 years, zero salvage value 10 years. Annual Expense (maintenance, c c.): $3,000. unflower-FT First Cost: $200,000. Life: 15 years, zero salvage value

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bob is considering buying a new farming tractor for his farm. He has a choice between a John-Deere-XP tractor and a Sunflower-FT tractor. Bob has a MARR of 5%. John-Deere-XP: First Cost: $150,000. Life: 10 years, zero salvage value at the end of 10 years. Annual Expense (maintenance, charging, etc.): $3,000. Sunflower-FT First Cost: $200,000. Life: 15 years, zero salvage value at the end of 15 years. Annual Expense (maintenance, charging, etc.): $3,500. For a 10-year study period, what salvage value for the extra 5 years of life for Sunflower-FT would result in that both tractors are equivalent in Present Worth? $87,734.1 $80,015.8 $105,266. $96,133.6 $115,190.
Transcribed Image Text:Bob is considering buying a new farming tractor for his farm. He has a choice between a John-Deere-XP tractor and a Sunflower-FT tractor. Bob has a MARR of 5%. John-Deere-XP: First Cost: $150,000. Life: 10 years, zero salvage value at the end of 10 years. Annual Expense (maintenance, charging, etc.): $3,000. Sunflower-FT First Cost: $200,000. Life: 15 years, zero salvage value at the end of 15 years. Annual Expense (maintenance, charging, etc.): $3,500. For a 10-year study period, what salvage value for the extra 5 years of life for Sunflower-FT would result in that both tractors are equivalent in Present Worth? $87,734.1 $80,015.8 $105,266. $96,133.6 $115,190.
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