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Equipment Y First cost, $ -40,000 -75,000 AOC, $ per year - 25,000 - 15,000 Life, years 4 6 Salvage value, $ 10,000 7,000 Estimated value after 3 years, $ 14,000 20,000

Equipment Y First cost, $ -40,000 -75,000 AOC, $ per year - 25,000 - 15,000 Life, years 4 6 Salvage value, $ 10,000 7,000 Estimated value after 3 years, $ 14,000 20,000

Essentials Of Investments
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
Problem 1PS
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A quarry outside of Austin, Texas, wishes to evaluate two similar pieces of equipment by which the company can meet new state environmental requirements for dust emissions. The MARR is 12% per year. Determine which alternative is economically better using (a) the AW method, and (b) AW method with a 3-year study period.

Equipment Y First cost, $ -40,000 -75,000 AOC, $ per year - 25,000 - 15,000 Life, years 4 6 Salvage value, $ 10,000 7,000 Estimated value after 3 years, $ 14,000 20,000
Transcribed Image Text:Equipment Y First cost, $ -40,000 -75,000 AOC, $ per year - 25,000 - 15,000 Life, years 4 6 Salvage value, $ 10,000 7,000 Estimated value after 3 years, $ 14,000 20,000
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