I need help answering these questions please. leded VieEnable Editing Table 10-2

Question

I need help answering these questions please.

leded VieEnable Editing Table 10-2 tem reezer Cost Freezer AFreezer H Electn60(30,000) ,600 6,000 (4.000) 5,000 vage Value e in Years of Capital I 6.00% 6.00% 7) A restaurant is trying to determine the lowest total cost for purchäsing a replacement frezer. The 7 cost of capital is 6 percent and the freezer should last for 11 years. Using Table 10 2 what is the total cost for Freezer A? A) $47 539.67 C) $28,600.00 D)8 913 B) $50,232.02 5) A restaurant is trying to determune the lowest total cost for purcdasing arep a replscement treezer, TheS cost of capital is 6 percent and the freezer should last for 1il years. Using Table 10-2: what is the total cost for Freezer B? A) $50,232.02 B) $58,913.56 G) $47539 6 D) $28.600.00 9) A restaurant is trying to determine the lowest total cost for purchasing a replaceptent freezer. The 9 cost of capital is6 percent and the freezer should last for 1l years. Using Table 10.2.which tnesezer should the restaurant purchase? A) Freezer A B) Freezer B D) Cannot tell without more information Both Freezers ds

Explanation / Answer

7. option B. is correct

8. Option B. is correct

9. Option A. is correct

total cost of freezer A is lower than Freezer B,hence freezer A should be selected.

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Initial investment          25,000 Annual cash flows          3,600          3,600          3,600          3,600          3,600          3,600          3,600          3,600          3,600          3,600           3,600 Salvage value         (6,000) Net cash flow          25,000          3,600          3,600          3,600          3,600          3,600          3,600          3,600          3,600          3,600          3,600         (2,400) Discount rate@ 6.00%          1.0000       0.9434       0.8900       0.8396       0.7921       0.7473       0.7050       0.6651       0.6274       0.5919       0.5584         0.5268 Discounted cash flow    25,000.00    3,396.23    3,203.99    3,022.63    2,851.54    2,690.13    2,537.86    2,394.21    2,258.68    2,130.83    2,010.22 (1,264.29) NPV    50,232.02

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