t/ta ? ? | | a search d·87843-18ourse … QUESTION 7 Dr L O a. 25% ob. 20% 110c, 1

Question

t/ta ? ? | | a search d·87843-18ourse … QUESTION 7 Dr L O a. 25% ob. 20% 110c, 18% 0422% O e 21% QUESTION Two options for a machine for use in a factory are being considered. Each option will last for 12 years and an MARR of 10% is to be used What is the AW of each option (A and B, respectively) and which should be selected? Option A ntual cost ? S7800, salvage S0. M&O; $2705 $14,400, sakage $2700, M&O; $1740 Option B: intial cost O a $4330, -$3960, 8 Ob $3960 55000. A ? ?-$3840.-S3620. ? Click

Explanation / Answer

Answer

a)

Let amount invested be x

After 1 year the value will be

x +28x/100 - (6//100)(x +28x/100) = x(1+ERR/100)^1

So To calculate ERR,

This amount must be equal to x(1+ERR/100)^1

Hence,

x +28x/100 - (6//100)(x +28x/100) = x(1+ERR/100)^1

Solving this we have

ERR = 20 %

8) The correct answer is (D)

Formula Used

CR = - P(A|P, MARR, 12) + SV(A|F, MARR, 12)

AW = CR - M&O

Here for option A we have

CR = -7800*0.1468

and A = 2705

Hence AW =3850

Similarly, For Option B

We have AW = -3730

Hence Option B should be selected.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.