A maintenance company is offering a firm tow payments plans, A and B for a machi

Question

A maintenance company is offering a firm tow payments plans, A and B for a machine, in plan A duration four years, firm has to pay annual uniform payment of $ 480. In plan B duration five years, firm has to pay monthly uniform payments of $ 50. the normal interest rate is 6% compounded Annually for plan A and for plan B. Using AQ method, which plan would you recommend? A given business has a useful life of 4 years. the market value at the end of the fourth year is $4000. It the MARR is 12% and estimated cash flow data s follow; a- calculate the Capital Recovery b-using AQ method, calculate the x value at the end of year 4

Explanation / Answer

1)use pv formulae ine excel to find the present value of each payment

pv(eate,nper,pmt,fv,type)

plan A:

Here rate=6% nper=4 pmt=480

=PV(6%,4,-480,,0)=$1663.25

plan B:

hre it is monthly so rate =6%/12 nper=5*12(monthly) pmt=50

=PV(6%/12,5*12,-50,,0)=$2586.28

Plan A is better since we are paying less there

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