Using the PW analysis on the basis of their capitalized cost to compare the Mutually Exclusive (ME) alternatives below at a rate of 10% per year. What is the capitalized cost of machine B? Machine A Machine B 1st Cost $12,000 8000 Operating cost/Yr 3500 2500 Salvage Value 3500 1000 Life infinite O a. S+33,000 O b. S-44,466 O. S-47,000 O d. S-42,580
Using the PW analysis on the basis of their capitalized cost to compare the Mutually Exclusive (ME) alternatives below at a rate of 10% per year. What is the capitalized cost of machine B? Machine A Machine B 1st Cost $12,000 8000 Operating cost/Yr 3500 2500 Salvage Value 3500 1000 Life infinite O a. S+33,000 O b. S-44,466 O. S-47,000 O d. S-42,580
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Using the PW analysis on the basis of their capitalized cost to compare the Mutually Exclusive (ME) alternatives below at a rate of 10% per year. What is the capitalized cost of machine
B?
Machine A
Machine B
1st Cost
$12,000
8000
Operating cost/Yr
3500
2500
Salvage Value
3500
1000
Life
infinite
5
O a. $+33,000
O b. $-44,466
O. S-47,000
O d. $-42,580
Expert Solution

Step 1
For Machine B:
- Initial cost (C) = 8,000
- Operating Cost (OC) = 2500
- Salvage (S) = 1000
- Useful life = 5 years
- Interest rate (i) = 10%
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Solved in 2 steps

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