Suppose SUNY Oswego needs to purchase a new Central AC for the Rich Hall. There are two choices, the first system costs $50,000 and is expected to last 10 years, and the second system costs $72,000 and is expected to last 15 years. Assume that the opportunity cost of capital is 10 percent. Which air-conditioning system should SUNY Oswego purchase?
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Suppose SUNY Oswego needs to purchase a new Central AC for the Rich Hall. There are...
Suppose SUNY Oswego needs to purchase a new Central AC for the Rich Hall. There are two choices, the first system costs $50,000 and is expected to last 10 years, and the second system costs $72,000 and is expected to last 15 years. Assume that the opportunity cost of capital is 10 percent. Which air-conditioning system should SUNY Oswego purchase?
Post your comments on the following problem. This problem is not taught in the textbook but you should be able to get an idea from the internet: Suppose SUNY Oswego needs to purchase a new Central AC for the Rich Hall. There are two choices, the first system costs $50,000 and is expected to last 10 years, and the second system costs $72,000 and is expected to last 15 years. Assume that the opportunity cost of capital is 10 percent....
Managers of Crane Embroidery have decided to purchase a new monogram machine and are considering two alternative machines. The first machine costs $102,000 and is expected to last five years. The second machine costs $163,000 and is expected to last eight years. Assume that the opportunity cost of capital is 8 percent. What is the equivalent annual cost for each system?
Managers of Swifty Embroidery have decided to purchase a new
monogram machine and are considering two alternative machines. The
first machine costs $104,000 and is expected to last five years.
The second machine costs $166,000 and is expected to last eight
years. Assume that the opportunity cost of capital is 8 percent.
What is the equivalent annual cost for each system? (Do
not round intermediate calculations. Round final answers to 2
decimal places, e.g. 2.75.)
Equivalent Annual
Cost
First machine...
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