For your new laboratory, you plan to purchase energy efficient freezers. There are two models in the market: Model X costs $100,000, and you need two units of model X for your project. Maintaining costs would be $50,000 and decreasing by $10,000 for each unit per year. Each freezer can be used for four years. At the end of which time, you estimate that the salvage value will be $70,000 for both freezers. Model Y costs $250,000 each. The maintaining cost of this model would be $10,000 per year and it would be decreasing by $5,000 starting in year 4. The salvage value of both model Y at the end of seven years is $60,000. Once again, two units of model Y is required for your project. Since you must complete your project in two years, you estimated that, the model X could be sold for $50,000 each and the model Y for $125,000 each after two years. Find the present worth difference between two models using MARR=10%. a) Between $52,640 and $54,800 b) Between $35,640 and $37,800 c) Between $32,640 and $34,800 d) Between $55,640 and $57,800 e) None of the answers are correct f) Between $45,640 and $47,800
For your new laboratory, you plan to purchase energy efficient freezers. There are two models in the market: Model X costs $100,000, and you need two units of model X for your project. Maintaining costs would be $50,000 and decreasing by $10,000 for each unit per year. Each freezer can be used for four years. At the end of which time, you estimate that the salvage value will be $70,000 for both freezers. Model Y costs $250,000 each. The maintaining cost of this model would be $10,000 per year and it would be decreasing by $5,000 starting in year 4. The salvage value of both model Y at the end of seven years is $60,000. Once again, two units of model Y is required for your project. Since you must complete your project in two years, you estimated that, the model X could be sold for $50,000 each and the model Y for $125,000 each after two years. Find the present worth difference between two models using MARR=10%. a) Between $52,640 and $54,800 b) Between $35,640 and $37,800 c) Between $32,640 and $34,800 d) Between $55,640 and $57,800 e) None of the answers are correct f) Between $45,640 and $47,800
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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Transcribed Image Text:For your new laboratory, you plan to purchase energy efficient freezers. There are
two models in the market: Model X costs $100,000, and you need two units of
model X for your project. Maintaining costs would be $50,000 and decreasing by
$10,000 for each unit per year. Each freezer can be used for four years. At the end of
which time, you estimate that the salvage value will be $70,000 for both freezers.
Model Y costs $250,000 each. The maintaining cost of this model would be $10,000
per year and it would be decreasing by $5,000 starting in year 4. The salvage value
of both model Y at the end of seven years is $60,000. Once again, two units of
model Y is required for your project. Since you must complete your project in two
years, you estimated that, the model X could be sold for $50,000 each and the
model Y for $125,000 each after two years. Find the present worth difference
between two models using MARR=10%.
a) Between $52,640 and $54,800
O b) Between $35,640 and $37,800
c) Between $32,640 and $34,800
d) Between $55,640 and $57,800
e) None of the answers are correct
f) Between $45,640 and $47,800
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