Transformers for underground works were planned to be provided. Type A has an initial cost of $70,000 and a life of 8 years. Type B has an initial cost of $95,000 and a life expectancy of 12 years. The annual operating cost for type A is expected to be $9000, while the AOC for type B is expected to be $7000. Salvage values are $5000 for type A, and $10,000 for type B. Using the incremental cash flow analysis, choose the better alternative.

Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
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Transformers for underground
works were planned to be provided.
Type A has an initial cost of $70,000
and a life of 8 years. Type B has an
initial cost of $95,000 and a life
expectancy of 12 years. The annual
operating cost for type A is
expected to be $9000, while the
AOC for type B is expected to be
$7000. Salvage values are $5000
for type A, and $10,000 for type B.
Using the incremental cash flow
analysis, choose the better
alternative.
Transcribed Image Text:Transformers for underground works were planned to be provided. Type A has an initial cost of $70,000 and a life of 8 years. Type B has an initial cost of $95,000 and a life expectancy of 12 years. The annual operating cost for type A is expected to be $9000, while the AOC for type B is expected to be $7000. Salvage values are $5000 for type A, and $10,000 for type B. Using the incremental cash flow analysis, choose the better alternative.
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