Hollywood Tabloid needs a new state-of-the-art camera to produce its monthly magazine. The company is looking at two cameras that are both capable of doing the job and has determined the following: Camera 1 costs $5,200. It should last for eight years and have annual maintenance costs of $240 per year. After eight years, the magazine can sell the camera for $380 Camera 2 costs $4,700. It will also last for eight years and have maintenance costs of $820 in year three, $900 in year five, and $1,000 in year seven. After eight years, the camera will have no resale value. (FV of $1. PV of $1. FVA of $1, and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.) Required: 1-0. Assume that an interest rate of 8% properly reflects the discount rate in this situation and that maintenance costs are paid at the end of each year. Determine the total cost of cameras. 1-b. Which camera should Hollywood Tabloid purchase? Complete this question by entering your answers in the tabs below. Req 1A Reg 18 Assume that an interest rate of 8% properly reflects the discount rate in this situation and that maintenance costs are paid at the end of each year. Determine the total cost of cameras. Camera 11 Camera 2 Total Cost Reg Req 1B >
Hollywood Tabloid needs a new state-of-the-art camera to produce its monthly magazine. The company is looking at two cameras that are both capable of doing the job and has determined the following: Camera 1 costs $5,200. It should last for eight years and have annual maintenance costs of $240 per year. After eight years, the magazine can sell the camera for $380 Camera 2 costs $4,700. It will also last for eight years and have maintenance costs of $820 in year three, $900 in year five, and $1,000 in year seven. After eight years, the camera will have no resale value. (FV of $1. PV of $1. FVA of $1, and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.) Required: 1-0. Assume that an interest rate of 8% properly reflects the discount rate in this situation and that maintenance costs are paid at the end of each year. Determine the total cost of cameras. 1-b. Which camera should Hollywood Tabloid purchase? Complete this question by entering your answers in the tabs below. Req 1A Reg 18 Assume that an interest rate of 8% properly reflects the discount rate in this situation and that maintenance costs are paid at the end of each year. Determine the total cost of cameras. Camera 11 Camera 2 Total Cost Reg Req 1B >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Hollywood Tabloid needs a new state-of-the-art camera to produce its monthly magazine. The company is looking at two
cameras that are both capable of doing the job and has determined the following:
Camera 1 costs $5,200. It should last for eight years and have annual maintenance costs of $240 per year. After eight years,
the magazine can sell the camera for $380.
Camera 2 costs $4,700. It will also last for eight years and have maintenance costs of $820 in year three, $900 in year five,
and $1,000 in year seven. After eight years, the camera will have no resale value. (FV of $1. PV of $1. FVA of $1, and PVA of $1)
(Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.)
Required:
1-0. Assume that an interest rate of 8% properly reflects the discount rate in this situation and that maintenance costs are paid
at the end of each year. Determine the total cost of cameras.
1-b. Which camera should Hollywood Tabloid purchase?
Complete this question by entering your answers in the tabs below.
Req 1A
Reg 18
Assume that an interest rate of 8% properly reflects the discount rate in this situation and that maintenance costs are paid at
the end of each year. Determine the total cost of cameras.
Camera 11
Camera 2
Total Cost
Reg
Req 1B >
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