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
Transcribed Image Text:Two alternative means of providing engineering drafting services are under consideration.
Handy-Cam
$250,000
$115/hr
$250/hr
$15,000
R-tistry
$200,000
$120/hr
$250/hr
$20,000
Purchase Price
Operating Cost
Revenue
Market value (end of useful life)
Useful life
6 years
6 years
It is anticipated that the chosen alternative will be used to generate revenue 8 hrs/day, 250
days per year. The company uses a MARR = 12% for all investments.
12% Interest Table
For the anticipated annual use of the drafting services, which alternative would you
recommend? Remember to show your calculations in your supporting work.
O Handy-Cam
O R-tistry
At what usage of the drafting services (hours/year) would you be indifferent between the
two alternatives? Remember to show your calculations in your supporting work.
Round your answer to the neares whole hour.
Ouection 7
O ntc
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