You must choose one of two types of equipment for your company. Option #1 Option #2...
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You must choose one of two types of equipment for your company. Option #1 Option #2 Initial costs $130000 Initial costs $350000 Annual benefit of $50000 Annual benefit of $87000 Salvage value of $20000 Salvage value of $50000 Useful life of 5 years Useful life of 3 years Assuming a 8% interest rate, a) what is the BCR of option #1? (2 points) b) what is the BCR of option #2? (2 points) c) what is the delta BCR? (3 points) d) which option would you choose if you have sufficient capital to invest? (2 points) You must choose one of two types of equipment for your company. Option #1 Option #2 Initial costs $130000 Initial costs $350000 Annual benefit of $50000 Annual benefit of $87000 Salvage value of $20000 Salvage value of $50000 Useful life of 5 years Useful life of 3 years Assuming a 8% interest rate, a) what is the BCR of option #1? (2 points) b) what is the BCR of option #2? (2 points) c) what is the delta BCR? (3 points) d) which option would you choose if you have sufficient capital to invest? (2 points)
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To calculate the BenefitCost Ratio BCR for each option we need to consider the initial costs annual ... View the full answer
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