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Initial Operating Asset First Cost Cost A $120,000 $30,000 B $30,000 Rate of Operating Cost Increase 11.5%/year 11.5%/year MARR 5% 25% $120,000 a. Determine the economic lives for assets A and B. b. Create a diagram showing the EAC(capital), the EAC(operating), and the EAC(total) for assets A and B. c. Explain the difference in economic life between A and B. Click the icon to view the table of compound interest factors for discrete compounding periods when i = 5%. a. The economic life of asset A is (Type whole numbers.) years, and the economic life of asset B is years. b. Create a diagram for asset A. Choose the correct diagram below. ○ A. EAC (Asset A) 80000- 0- 0 Total A A A A A 4 4 4 4 4 4 4 4 4 4 4 □□□□ Maintenance Capital Year 16 ☑ EAC (Asset A) 80000 ΔΔ Total 4444444444 ロロ Maintenance Capital ☑ EAC (Asset A) EAC (Asset A) B. Total 80000 ADDDDDDDDDD Maintenance A A 0- Capital 0 16 Year D. 80000 Total Maintenance Capital Q ☑ ☑

Initial Operating Asset First Cost Cost A $120,000 $30,000 B $30,000 Rate of Operating Cost Increase 11.5%/year 11.5%/year MARR 5% 25% $120,000 a. Determine the economic lives for assets A and B. b. Create a diagram showing the EAC(capital), the EAC(operating), and the EAC(total) for assets A and B. c. Explain the difference in economic life between A and B. Click the icon to view the table of compound interest factors for discrete compounding periods when i = 5%. a. The economic life of asset A is (Type whole numbers.) years, and the economic life of asset B is years. b. Create a diagram for asset A. Choose the correct diagram below. ○ A. EAC (Asset A) 80000- 0- 0 Total A A A A A 4 4 4 4 4 4 4 4 4 4 4 □□□□ Maintenance Capital Year 16 ☑ EAC (Asset A) 80000 ΔΔ Total 4444444444 ロロ Maintenance Capital ☑ EAC (Asset A) EAC (Asset A) B. Total 80000 ADDDDDDDDDD Maintenance A A 0- Capital 0 16 Year D. 80000 Total Maintenance Capital Q ☑ ☑

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter1: Introduction And Goals Of The Firm
Section: Chapter Questions
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Initial Operating Asset First Cost Cost A $120,000 $30,000 B $30,000 Rate of Operating Cost Increase 11.5%/year 11.5%/year MARR 5% 25% $120,000 a. Determine the economic lives for assets A and B. b. Create a diagram showing the EAC(capital), the EAC(operating), and the EAC(total) for assets A and B. c. Explain the difference in economic life between A and B. Click the icon to view the table of compound interest factors for discrete compounding periods when i = 5%. a. The economic life of asset A is (Type whole numbers.) years, and the economic life of asset B is years. b. Create a diagram for asset A. Choose the correct diagram below. ○ A. EAC (Asset A) 80000- 0- 0 Total A A A A A 4 4 4 4 4 4 4 4 4 4 4 □□□□ Maintenance Capital Year 16 ☑ EAC (Asset A) 80000 ΔΔ Total 4444444444 ロロ Maintenance Capital ☑ EAC (Asset A) EAC (Asset A) B. Total 80000 ADDDDDDDDDD Maintenance A A 0- Capital 0 16 Year D. 80000 Total Maintenance Capital Q ☑ ☑
Transcribed Image Text:Initial Operating Asset First Cost Cost A $120,000 $30,000 B $30,000 Rate of Operating Cost Increase 11.5%/year 11.5%/year MARR 5% 25% $120,000 a. Determine the economic lives for assets A and B. b. Create a diagram showing the EAC(capital), the EAC(operating), and the EAC(total) for assets A and B. c. Explain the difference in economic life between A and B. Click the icon to view the table of compound interest factors for discrete compounding periods when i = 5%. a. The economic life of asset A is (Type whole numbers.) years, and the economic life of asset B is years. b. Create a diagram for asset A. Choose the correct diagram below. ○ A. EAC (Asset A) 80000- 0- 0 Total A A A A A 4 4 4 4 4 4 4 4 4 4 4 □□□□ Maintenance Capital Year 16 ☑ EAC (Asset A) 80000 ΔΔ Total 4444444444 ロロ Maintenance Capital ☑ EAC (Asset A) EAC (Asset A) B. Total 80000 ADDDDDDDDDD Maintenance A A 0- Capital 0 16 Year D. 80000 Total Maintenance Capital Q ☑ ☑
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