Sunshine will be using an equipment for her project. She wants to determine which equipment is better. The pertinent data for the two equipment are as follows: Equipment A Equipment B First Cost 50,000 150,000 Salvage Value 2,000 6,000 Annual Maintenance 6,000 3,000 Economic Life 5 15 The maximum rate of return for both equipment is 12% per annum. Use sinking fund method of depreciation. Determine the annual cost of Equipment A. Determine the present worth of Equipment B. What is the rate of return for the additional investment on equipment B?
Sunshine will be using an equipment for her project. She wants to determine which equipment is better. The pertinent data for the two equipment are as follows: Equipment A Equipment B First Cost 50,000 150,000 Salvage Value 2,000 6,000 Annual Maintenance 6,000 3,000 Economic Life 5 15 The maximum rate of return for both equipment is 12% per annum. Use sinking fund method of depreciation. Determine the annual cost of Equipment A. Determine the present worth of Equipment B. What is the rate of return for the additional investment on equipment B?
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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Sunshine will be using an equipment for her project. She wants to determine which equipment
is better. The pertinent data for the two equipment are as follows:
Equipment A Equipment B
First Cost 50,000 150,000
Salvage Value 2,000 6,000
Annual Maintenance 6,000 3,000
Economic Life 5 15
The maximum
- Determine the annual cost of Equipment A.
- Determine the present worth of Equipment B.
- What is the rate of return for the additional investment on equipment B?
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