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Answer the following questions using Microsoft Excel formulas Q1. New digital scanning graphics equipment is expected to cost

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Answer #1

Given information:

Life cycle 1: Asset cost = $20,000

N = 3

I = 22%

Operating cost = $8,000

Then, Annual Worth = asset cost (A/P,N,I) - operating cost

= -$20,000 [I(I+1)^N]/[(1+I)^N] - $8,000

= -$20,000 [0.22(0.22 +1)81/10.22)] - $8,000

= -$20,000 [0.48865]-$8,000

= -$17,793.16

Life cycle 2 information: Asset cost = $20,000

N = 6

I = 22%

Operating costs = $8,000

Then,

Annual Worth = Asset cost (A/P,22%,6) - [Asset cost * (P/F,22%,3) * (A/P,22%,6)] - Operating cost

= -$20,000[ ​10.22(0.22+1 )6И(1 + 0.22 )6 ]​​- [ $20,000 * 1/10.22) * 10.22(0.22+1 )6И(1 + 0.22 )6 ​​​​​] - $8,000

= -$20,000 (0.31576) - [$20,000*(0.55070)*(0.31576)]-$8,000

= -$17, 793.16

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