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

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

I need the answer in 10 minutes please

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
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%
steps

Step by step

Solved in 2 steps

Blurred answer
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education