Q1.The device was purchased 3 years ago for $ 13,000. Its current value is $ 6500 and its annual operating cost It is $ 1250 and from now on it will increase by 10% every year. A second-hand device priced at $ 2800 is available, But the cost of operation is $ 2400 per year. The usefullife of both devices is expected to be another6 years And the scrapvalue of the current machine will be $ 1600 and the second hand machine will be zero. A) Use the "ExternalView" list of receipts and payments forthe next 6 years if the device Use the previous one for the rest of its life, as well as if you buy a second-hand device. B) If the interest rate is 12%, find the best option.

Q1.The device was purchased 3 years ago for $ 13,000. Its current value is $ 6500 and its annual operating cost It is $ 1250 and from now on it will increase by 10% every year. A second-hand device priced at $ 2800 is available, But the cost of operation is $ 2400 per year. The usefullife of both devices is expected to be another6 years And the scrapvalue of the current machine will be $ 1600 and the second hand machine will be zero. A) Use the "ExternalView" list of receipts and payments forthe next 6 years if the device Use the previous one for the rest of its life, as well as if you buy a second-hand device. B) If the interest rate is 12%, find the best option.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 10P

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