FE: You must choose between four pieces of comparable equipment based on the cash flows below. All four have a life of 8 years. Parameter A B C D First cost $25,000 $35,000 $20,000 $40,000 Annual costs $8,000 $6,000 $9,000 $5,000 Salvage value $2,500 $3,500 $2,000 $4,000 The discount rate is 12%. Ignore taxes. What are the two most preferable pieces of equipment? What is the approximate difference between their present worth values? OA and C, $234 OB and D, $234 OA and C, $170 OB and D, $170

FE: You must choose between four pieces of comparable equipment based on the cash flows below. All four have a life of 8 years. Parameter A B C D First cost $25,000 $35,000 $20,000 $40,000 Annual costs $8,000 $6,000 $9,000 $5,000 Salvage value $2,500 $3,500 $2,000 $4,000 The discount rate is 12%. Ignore taxes. What are the two most preferable pieces of equipment? What is the approximate difference between their present worth values? OA and C, $234 OB and D, $234 OA and C, $170 OB and D, $170

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter1: Introduction And Goals Of The Firm

Section: Chapter Questions

Problem 2.2CE

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