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 $240,000, an operating cost of $6,500 per quarter, and a salvage value of $40,000 after its 2-year life. Package L has a first cost of $170,000 with a lower operating cost of $3,000 per quarter and an estimated $19,000 salvage value after its 4-year life. Which package offers the lower present worth analysis at an interest rate of 8% per year, compounded quarterly? The present worth of package K is ( it is not -481,000, this is the part I need help with) and that of package L is (it is about -197,000) L 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 $240,000, an operating cost of $6,500 per quarter, and a salvage value of $40,000 after its 2-year life. Package L has a first cost of $170,000 with a lower operating cost of $3,000 per quarter and an estimated $19,000 salvage value after its 4-year life. Which package offers the lower present worth analysis at an interest rate of 8% per year, compounded quarterly?
The present worth of package K is ( it is not -481,000, this is the part I need help with)
and that of package L is (it is about -197,000)
L offers the lower present worth.
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