Question

Alternatives X and Y are described below. X involves using a CISC microprocessor while alternative Y is about using ASIC microprocessor. Wh you select based on their Future Worth? Use an annual interest rate of 5% for both alternatives. All values are in $ 7. ich microprocessor would Alternative Initial Cost Yearly Operating Expenses 6,000 500 2,500 1,500 6 4,000 Annual Revenues Salvage Value Life (years 1,000 900
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Answer #1

7. Let us do the calculations in the below table.

Microprocessors Initial cost Yearly operating expenses Salvage Value Total Cost X $4,000 $6,000 0 $900 $4,900 $500 $1,500 $8,000 $1,000 $2,500 Annual Revenue Life of Miroprocessor (years) 6 Interest rate @5% 1000*5/100 2500*5/100 $50 $125 50* 3 years 125*6 years Interest value as per the given Life of years $150 $750 The annual revenue interest valud of given years ($1,000*3)+$150 $3,150 ($2,500 *6)+$750 $15,750 ProfitAfter deducting the total cost of microprocessor value annual revenue 3150-4900 15750-8000 X fell in loss -$1,750 Y got profi

After observing the above table the worth of microprocessor is Y.

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