Answered: Use an interest rate of 10% per year.…

Use an interest rate of 10% per year. Alternative А В First cost, $ -50,000 -80,000 Annual cost, $/year -20,000 - 10,000 Salvage value, $ Life, years 10,000 25,000 3

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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Question

The equivalent annual worth of alternative A is closest to:
a. $-25,130
b. $-37,100
c. $-41,500
d. $-42,900

Use an interest rate of 10% per year.
Alternative
А
В
First cost, $
-50,000
-80,000
Annual cost, $/year
-20,000
- 10,000
Salvage value, $
Life, years
10,000
25,000
3

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