RAW THE CASH FLOW DIAGRAM Company A is considering two alternatives. Machine A has a first cost of $15,000 and a salvage value of $2,000. The life is 6 years and it has an annual maintenance and operating cost of $1,000. Machine B has a first cost of $18,000, a life of 8 years and no salvage value. The annual operating cost is $800. Which machine should be used to justify the purchase of such machine if money is worth 7% and calculate the difference between the equivalent annual worths.
RAW THE CASH FLOW DIAGRAM Company A is considering two alternatives. Machine A has a first cost of $15,000 and a salvage value of $2,000. The life is 6 years and it has an annual maintenance and operating cost of $1,000. Machine B has a first cost of $18,000, a life of 8 years and no salvage value. The annual operating cost is $800. Which machine should be used to justify the purchase of such machine if money is worth 7% and calculate the difference between the equivalent annual worths.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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DRAW THE CASH FLOW DIAGRAM
Company A is considering two alternatives. Machine A has a first cost of $15,000 and a salvage value of $2,000. The life is 6 years and it has an annual maintenance and operating cost of $1,000. Machine B has a first cost of $18,000, a life of 8 years and no salvage value. The annual operating cost is $800. Which machine should be used to justify the purchase of such machine if money is worth 7% and calculate the difference between the equivalent annual worths.
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