Project A costs $35,000 initially, has a 4-year life and incurs $4,000 in annual year-end costs. Project B costs $39,000 initially, has a 5-year life and incurs $4,500 in annual year-end costs. If the company's required return is 10%, calculate the equivalent annual cost of each project. Options Project A $16,788; Project B $15,211 Project A $13,452; Project B $12,924 Project A $15,041; Project B $14,788 Project A $12,623; Project B $11,679 Project A $14,190; Project B $13,250
Project A costs $35,000 initially, has a 4-year life and incurs $4,000 in annual year-end costs. Project B costs $39,000 initially, has a 5-year life and incurs $4,500 in annual year-end costs. If the company's required return is 10%, calculate the equivalent annual cost of each project. Options Project A $16,788; Project B $15,211 Project A $13,452; Project B $12,924 Project A $15,041; Project B $14,788 Project A $12,623; Project B $11,679 Project A $14,190; Project B $13,250
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Project A costs $35,000 initially, has a 4-year life and incurs $4,000 in annual year-end costs. Project B costs $39,000 initially, has a 5-year life and incurs $4,500 in annual year-end costs. If the company's required return is 10%, calculate the equivalent annual cost of each project.
Options
Project A $16,788; Project B $15,211 |
|
Project A $13,452; Project B $12,924 |
|
Project A $15,041; Project B $14,788 |
|
Project A $12,623; Project B $11,679 |
|
Project A $14,190; Project B $13,250 |
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