Determine which machine is better to purchase, if i = 10%. 1. Use a B/C 2. Use a Payback Period

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
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Three alternatives have the following cost data associated with them:
Data
Alt. 1
Alt. 2
Alt. 3
Useful Life, Years
10
10
10
First Cost
$1,125,000
$1,980,000
$1,650,000
Annual Benefit
265,000
589,000
435,000
Annual M&O Costs
95,000
97,000
91,000
Salvage Value
145,000
205,000
178,000
Determine whích machine is better to purchase, if i = 10%.
1. Use a B/C
2. Use a Payback Period
Transcribed Image Text:Three alternatives have the following cost data associated with them: Data Alt. 1 Alt. 2 Alt. 3 Useful Life, Years 10 10 10 First Cost $1,125,000 $1,980,000 $1,650,000 Annual Benefit 265,000 589,000 435,000 Annual M&O Costs 95,000 97,000 91,000 Salvage Value 145,000 205,000 178,000 Determine whích machine is better to purchase, if i = 10%. 1. Use a B/C 2. Use a Payback Period
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