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.
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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Transcribed Image Text: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 for the next 6 years if the device
Use the previous one for the rest of its life, as well as if you buy a second-handdevice.
B) If the interest rate is 12%, find the best option.
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