Machine X has an upfront cost of $439,500 and annual operating costs of $13,275 over its 4-year life. Machine Y costs $395,000 upfront and has annual operating costs of $6,380 over its 3-year life. Whichever machine is purchased will continue to be replaced at the end of its useful life. If the required return is 16.75% for both machine, what is the absolute value of the dollar difference between the EACs of the two machines?
Machine X has an upfront cost of $439,500 and annual operating costs of $13,275 over its 4-year life. Machine Y costs $395,000 upfront and has annual operating costs of $6,380 over its 3-year life. Whichever machine is purchased will continue to be replaced at the end of its useful life. If the required return is 16.75% for both machine, what is the absolute value of the dollar difference between the EACs of the two machines?
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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Question
Machine X has an upfront cost of $439,500 and annual operating costs of $13,275 over its 4-year life. Machine Y costs $395,000 upfront and has annual operating costs of $6,380 over its 3-year life. Whichever machine is purchased will continue to be replaced at the end of its useful life. If the required return is 16.75% for both machine, what is the absolute value of the dollar difference between the EACs of the two machines?
Options
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$10,552 |
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$10,845 |
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$11,138 |
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$11,431 |
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$11,724 |
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