You and your partner have become very interested in cross-country motorcycle racing and wish to purchase entry-level equipment. You have identified two alternative sets of equipment and gear. Package K has a first cost of $210,000, an operating cost of $5,000 per quarter, and a salvage value of $40,000 after its 2-year life. Package L has a first cost of $280,000 with a lower operating cost of $2,700 per quarter and an estimated $16,000 salvage value after its 4-year life. Which package offers the lower present worth analysis at an interest rate of 20% per year, compounded quarteriy? The present worth of package K is $[ and that of package L is $ (Click to select) offers the lower present worth.

You and your partner have become very interested in cross-country motorcycle racing and wish to purchase entry-level equipment. You have identified two alternative sets of equipment and gear. Package K has a first cost of $210,000, an operating cost of $5,000 per quarter, and a salvage value of $40,000 after its 2-year life. Package L has a first cost of $280,000 with a lower operating cost of $2,700 per quarter and an estimated $16,000 salvage value after its 4-year life. Which package offers the lower present worth analysis at an interest rate of 20% per year, compounded quarteriy? The present worth of package K is $[ and that of package L is $ (Click to select) offers the lower present worth.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

100%

You and your partner have become very Interested in cross-country motorcycle racing and wish to purchase entry-level equipment.
You have identified two alternative sets of equipment and gear. Package K has a first cost of $210,000, an operating cost of
$5,000 per quarter, and a salvage value of $40,000 after its 2-year life. Package L has a first cost of $280,000 with a lower operating
cost of $2,700 per quarter and an estimated $16,000 salvage value after its 4-year life. Which package offers the lower present worth
analysis at an interest rate of 20% per year, compounded quarteriy?
The present worth of package K is $
and that of package L is $
(Click to select) offers the lower present worth.

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