Question 1A (3 marks) EXCEL, an equipment costing $100,000 has a useful life of 6 years....

Transcribed Image Text:

Question 1A (3 marks) EXCEL, an equipment costing $100,000 has a useful life of 6 years. It has a resale value of $8,000. Annual costs will be $7,000 for each of the year. Another equipment, APLUS costing $120,000 has a useful life of eight years, after which time its estimated resale value will be $25,000. Annual costs will be $5,000 for the first three years and then $8,000 for each of the next five years. Compute the annual equivalent cost for each equipment using a discount rate of 10%. Which equipment will be your choice and why? Question 1A (3 marks) EXCEL, an equipment costing $100,000 has a useful life of 6 years. It has a resale value of $8,000. Annual costs will be $7,000 for each of the year. Another equipment, APLUS costing $120,000 has a useful life of eight years, after which time its estimated resale value will be $25,000. Annual costs will be $5,000 for the first three years and then $8,000 for each of the next five years. Compute the annual equivalent cost for each equipment using a discount rate of 10%. Which equipment will be your choice and why?

Answer rating: 100% (QA)

1 To compute the annual equivalent cost AEC for each equipment we need to calculate the annual costs ... View the full answer