Question: The data for used and new machines are shown below (i = 10%) Used Machine New Machine Initial Cost, $ -15,000 - 40,000 Annual Cost,

The data for used and new machines are shown below (i = 10%)

Used Machine

New Machine

Initial Cost, $

-15,000

- 40,000

Annual Cost, $/year

- 8000

- 2000

Salvage Value, $

5000

10,000

Life, years

2

4

  1. Draw the cash flow diagram for both machines.
  2. Which machine would be selected based on their present worth?
  3. Determine the capitalized costs for both machines.

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