Question: 3. An engineer was given the assignment to determine which model of a new excavator the company should purchase based on an interest rate of
3. An engineer was given the assignment to determine which model of a new excavator the company should purchase based on an interest rate of 10 percent per year? Model A - will cost $100,000 to purchase (year O) and will generate $12.000 income each year for next 10 years (years 1-10) Model B - will cost $150,000 to purchase (year O) and will generate $25,000 income each year for next 10 years (years 1-10) 1. Draw the cash flow diagram for Model B 2. Based on net present value (time zero) of the income and expense, which model should the engineer recommend and why
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