Homework Answers
Answer:
Savings = $100,000 -$36,000
= $64,000
Cost of Capital = 9%
Replacement of project is 3 years.
Present Value of savings:
(Calculations are done on paper)
now,
Cost of project = $ 1,260,000
(Calculations on paper)
D) YES,
because
PV of annual equivalent cost (177,352.82) is greater than PV of savings (162,004)
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