A company is considering purchasing either Machine I or Machine II. The following data apply: O...

 

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A company is considering purchasing either Machine I or Machine II. The following data apply: O $21,500 O $26,575 $27,080 Parameter The annual interest rate is 10%, and all cash flows may be treated as end-of-year cash flows. Assume that the equivalent annual cost is the value of the level annuity equal to the total cost of a project. If Machine II is purchased, the equivalent annual cost is most nearly O $21,000 First cost Estimated life (years) Salvage value Other costs, including taxes, insurance, and operation (per year) Machine I $80,000 20 $20,000 $18,000 Machine II $100,000 25 $25,000 $15,000 (first 15 years) $20,000 (next 10 years) A company is considering purchasing either Machine I or Machine II. The following data apply: O $21,500 O $26,575 $27,080 Parameter The annual interest rate is 10%, and all cash flows may be treated as end-of-year cash flows. Assume that the equivalent annual cost is the value of the level annuity equal to the total cost of a project. If Machine II is purchased, the equivalent annual cost is most nearly O $21,000 First cost Estimated life (years) Salvage value Other costs, including taxes, insurance, and operation (per year) Machine I $80,000 20 $20,000 $18,000 Machine II $100,000 25 $25,000 $15,000 (first 15 years) $20,000 (next 10 years)

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