(1 point) The capitalized cost of an assset is the sum of the original cost of t
ID: 2885302 • Letter: #
Question
(1 point) The capitalized cost of an assset is the sum of the original cost of the asset and the present value of maintaining the asset. Suppose a company is considering the purchase of two different machines. Machine 1 costs $20000 and t years from now will cost MI (t) = 4000(1 + 0.08 dollars to maintain. Machine 2 costs only $6000, but its maintenance cost at time t is M2() = 4300 dollars. If the cost of money is 5% per year compounded continuously, what is the capitalized cost of each machine? Machine 1 cost: dollars. Machine 2 cost dollars.Explanation / Answer
Machine 1 Cost= (20000+4000(1+0.08t))*(1.05)t
=(24000+320t )*(1.05)t
Machine 2 Cost= (6000+4300)*(1.05)t
= (10300 * 1.05t)
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