Your friend is considering a new exhaust system for his Lamborghini Diablo. The estimates from the two shops are shown in the following table. Besides installation, shop Ý includes a full replacement warranty for 4 years in the quote. Since money does not appear to be a problem for your friend, and he asked you about the economics of the two quotes, which should he choose based on annual worth values and an interest rate of 12% per year? Shop Installed cost, $ Total AOC. $/year Salvage value, $ Life, years x -2,250 -1,200 125 2 Y -3,400 -900 900 4 The annual worth value of shop X is $- , and the annual worth value of shop Y is S- The shop that your friend has to select on the basis of the annual worth analysis is [(Clid, to select)

Your friend is considering a new exhaust system for his Lamborghini Diablo. The estimates from the two shops are shown in the following table. Besides installation, shop Ý includes a full replacement warranty for 4 years in the quote. Since money does not appear to be a problem for your friend, and he asked you about the economics of the two quotes, which should he choose based on annual worth values and an interest rate of 12% per year? Shop Installed cost, $ Total AOC. $/year Salvage value, $ Life, years x -2,250 -1,200 125 2 Y -3,400 -900 900 4 The annual worth value of shop X is $- , and the annual worth value of shop Y is S- The shop that your friend has to select on the basis of the annual worth analysis is [(Clid, to select)

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

Your friend is considering a new exhaust system for his Lamborghini Diablo. The estimates from the two shops are shown in the
following table. Besides installation, shop Y includes a full replacement warranty for 4 years in the quote. Since money does not
appear to be a problem for your friend, and he asked you about the economics of the two quotes, which should he choose based on
annual worth values and an interest rate of 12% per year?
Shop
installed cost, $
Total AOC, $/year
Salvage value, $
Life, years
X
-2,250
-1,200
125
Y
-3,400
-900
900
4
The annual worth value of shop X is $-
, and the annual worth value of shop Y is $-
The shop that your friend has to select on the basis of the annual worth analysis is (Clic to select)

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