Now assume the company is considering two methods: automated system and manual system. The estimates for each method are shown below. Automated 400,000 30,000 (per 3 years) 150,000 (per year) 200,000 9 Manual 0 200,000 (per 6 years) 100,000 (per year) 500,000 Infinite First cost, $ Operating cost, $ Revenue, S Salvage value Life, years The effective interest rate is 3% per quarter. Which alternative should be selected? Use the Capitalized Cost Approach.
Now assume the company is considering two methods: automated system and manual system. The estimates for each method are shown below. Automated 400,000 30,000 (per 3 years) 150,000 (per year) 200,000 9 Manual 0 200,000 (per 6 years) 100,000 (per year) 500,000 Infinite First cost, $ Operating cost, $ Revenue, S Salvage value Life, years The effective interest rate is 3% per quarter. Which alternative should be selected? Use the Capitalized Cost Approach.
Chapter1: Making Economics Decisions
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
Transcribed Image Text:Now assume the company is considering two methods: automated system and manual
system. The estimates for each method are shown below.
Automated
400,000
30,000 (per 3 years)
150,000 (per year)
200,000
9
Manual
0
200,000 (per 6 years)
100,000 (per year)
500,000
Infinite
First cost, $
Operating cost, $
Revenue, S
Salvage value
Life, years
The effective interest rate is 3% per quarter.
Which alternative should be selected? Use the Capitalized Cost Approach.
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