Method A; The initial investment cost will be 80,000 TL and a scrap yield of 15,000 TL after 3 years. Operation cost is 30,000 TL in the first year and increases by 4,000 TL every year. Method B; The initial investment cost will be 120,000 TL and a scrap yield of 40,000 TL after 3 years. Operation cost increases by 8,000 TL in the first year and by 6,500 TL each year. In case the interest rate is 12% per year, determine which method is more economically suitable by using the Present Value Analysis (PW) method
Method A; The initial investment cost will be 80,000 TL and a scrap yield of 15,000 TL after 3 years. Operation cost is 30,000 TL in the first year and increases by 4,000 TL every year. Method B; The initial investment cost will be 120,000 TL and a scrap yield of 40,000 TL after 3 years. Operation cost increases by 8,000 TL in the first year and by 6,500 TL each year. In case the interest rate is 12% per year, determine which method is more economically suitable by using the Present Value Analysis (PW) method
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
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Method A; The initial investment cost will be 80,000 TL and a scrap yield of 15,000 TL after 3 years. Operation cost is 30,000 TL in the first year and increases by 4,000 TL every year. Method B; The initial investment cost will be 120,000 TL and a scrap yield of 40,000 TL after 3 years. Operation cost increases by 8,000 TL in the first year and by 6,500 TL each year. In case the interest rate is 12% per year, determine which method is more economically suitable by using the
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