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J. Doe must choose between two different models. The study period cosidered is 6 year. Model 1 has life of your years with cost of $15,000 and maintenance costs of $1,100 per year in years 2,3, and 4 (no maintenace cost in year 1). The salvage value for this model can estimated using the declining – balance depreciation method (d=25). Model 2 has a life of three years with a first cost of $17,500 and maintenance cost of $850 per year. Its salvage value can be estimated u sing the straight line depreciation method knowing the salvage value after one year is $15, 250. Consider MARR of 12% What is the salvage value of the model 2 at year 3? (a) $15250 (b) $13000 (c) $8500 (d) $10750 Please determine the total AW for the model 2(including maintenance and capital cost). Use PW =- $13, 000 for model 2 for capita costs and for the study period. (a) - $3162 (b) - $3781 (c) - $4012 (d) - $4724 What is the present worth of the capital cost for the model 2 for the study period? (a) - $9845 (b) – $12054 (c) - $16859 (d) - $25724

J. Doe must choose between two different models. The study period cosidered is 6 year. Model 1 has life of your years with cost of $15,000 and maintenance costs of $1,100 per year in years 2,3, and 4 (no maintenace cost in year 1). The salvage value for this model can estimated using the declining – balance depreciation method (d=25). Model 2 has a life of three years with a first cost of $17,500 and maintenance cost of $850 per year. Its salvage value can be estimated u sing the straight line depreciation method knowing the salvage value after one year is $15, 250. Consider MARR of 12% What is the salvage value of the model 2 at year 3? (a) $15250 (b) $13000 (c) $8500 (d) $10750 Please determine the total AW for the model 2(including maintenance and capital cost). Use PW =- $13, 000 for model 2 for capita costs and for the study period. (a) - $3162 (b) - $3781 (c) - $4012 (d) - $4724 What is the present worth of the capital cost for the model 2 for the study period? (a) - $9845 (b) – $12054 (c) - $16859 (d) - $25724

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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J. Doe must choose between two different models. The study period cosidered is 6 year. Model 1 has life of your years with cost of $15,000 and maintenance costs of $1,100 per year in years 2,3, and 4 (no maintenace cost in year 1). The salvage value for this model can estimated using the declining – balance depreciation method (d=25). Model 2 has a life of three years with a first cost of $17,500 and maintenance cost of $850 per year. Its salvage value can be estimated using the straight line depreciation method knowing the salvage value after one year is $15,250. Consider MARR of 12% What is the salvage value of the model 2 at year 3? (a) $15250 (b) $13000 (c) $8500 (d) $10750 Please determine the total AW for the model 2 (including maintenance and capital cost). Use PW =– $13, 000 for model 2 for capita costs and for the study period. (a) - $3162 (b) - $3781 (c) - $4012 (d) - $4724 What is the present worth of the capital cost for the model 2 for the study period? (a) - $9845 (b) - $12054 (c) - $16859 (d) - $25724
Transcribed Image Text:J. Doe must choose between two different models. The study period cosidered is 6 year. Model 1 has life of your years with cost of $15,000 and maintenance costs of $1,100 per year in years 2,3, and 4 (no maintenace cost in year 1). The salvage value for this model can estimated using the declining – balance depreciation method (d=25). Model 2 has a life of three years with a first cost of $17,500 and maintenance cost of $850 per year. Its salvage value can be estimated using the straight line depreciation method knowing the salvage value after one year is $15,250. Consider MARR of 12% What is the salvage value of the model 2 at year 3? (a) $15250 (b) $13000 (c) $8500 (d) $10750 Please determine the total AW for the model 2 (including maintenance and capital cost). Use PW =– $13, 000 for model 2 for capita costs and for the study period. (a) - $3162 (b) - $3781 (c) - $4012 (d) - $4724 What is the present worth of the capital cost for the model 2 for the study period? (a) - $9845 (b) - $12054 (c) - $16859 (d) - $25724
List of Equations: M i̟ 1+ M i=|1+ СК -1 i- -1 (1+i)* –1 N i - (A/F, i, N) = (F/A, i, N) = (1+i)* – 1 (1+i)* – 1 i(1+i)* i(1+i)* (P/A, i, N) : (A/P, i,N) = _(1+i)" – 1 - (1 +i)™ – iN – 1 (1+i)" – iN –1 - - - (P/G,i, N): (A/G,i, N) = %3D N (1+i) i[(1 +i)^ – 1] 1-(1+ g) (1+ i)* N (P/A,g, i, N)= if itg i -g N (P/A,g i, N)= (1+i) if i=g А PW — СЕ CR(i) — (Р — S)(А/Р, і, N) + iS Bn = A(P/A,i,N-n) In = (Bn-1)*i= A(P/A,i,N-n+1)*i PPn = A(P/F,i,N-n+1) P-S Ds/(n) = Р-S BVs/(n)=P – n N BV 45(n) = P(1–d)" Da, (n) = dP(1– d) n-1 for n>1 CA, = rd{1-4)a- CCA1 = P(d/2) ССА (1-d)"-2 for n>2 G=t * (Udisposal – S) G=t-(Udisposal – P) – tcG+(S – P) - d i'= i- f) (1+f) i =i' +f+i'*f n-1 U n 2 MARRA = MARRR +f+ MARRR f *
Transcribed Image Text:List of Equations: M i̟ 1+ M i=|1+ СК -1 i- -1 (1+i)* –1 N i - (A/F, i, N) = (F/A, i, N) = (1+i)* – 1 (1+i)* – 1 i(1+i)* i(1+i)* (P/A, i, N) : (A/P, i,N) = _(1+i)" – 1 - (1 +i)™ – iN – 1 (1+i)" – iN –1 - - - (P/G,i, N): (A/G,i, N) = %3D N (1+i) i[(1 +i)^ – 1] 1-(1+ g) (1+ i)* N (P/A,g, i, N)= if itg i -g N (P/A,g i, N)= (1+i) if i=g А PW — СЕ CR(i) — (Р — S)(А/Р, і, N) + iS Bn = A(P/A,i,N-n) In = (Bn-1)*i= A(P/A,i,N-n+1)*i PPn = A(P/F,i,N-n+1) P-S Ds/(n) = Р-S BVs/(n)=P – n N BV 45(n) = P(1–d)" Da, (n) = dP(1– d) n-1 for n>1 CA, = rd{1-4)a- CCA1 = P(d/2) ССА (1-d)"-2 for n>2 G=t * (Udisposal – S) G=t-(Udisposal – P) – tcG+(S – P) - d i'= i- f) (1+f) i =i' +f+i'*f n-1 U n 2 MARRA = MARRR +f+ MARRR f *
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