The following pair of assets differ only in the MARR. The problem asks you to determine...
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The following pair of assets differ only in the MARR. The problem asks you to determine the effect of this difference on the economic life and to explain the result. All assets decline in value by 20 percent of current each year. Installation costs are zero for all assets. Further data concerning the four pairs of assets are given in the table that follows. Asset A B First Cost $135,000 Initial Operating Cost $35,000 $135,000 $35,000 Rate of Operating Cost Increase 13.5%/year 13.5%/year MARR 5% 25% a. Determine the economic lives for assets A and B. b. Create a diagram showing the EAC(capital), the EAC(operating), and the EAC(total) for assets A and B. c. Explain the difference in economic life between A and B. Click the icon to view the table of compound interest factors for discrete compounding periods when i = 5%. a. The economic life of asset A is (Type whole numbers.) years, and the economic life of asset B is years. b. Create a diagram for asset A. Choose the correct diagram below. O A. EAC (Asset A) Total 110000 DDDDDDD Maintenance Capital A A EAC (Asset A) C. 0 Year 16 D. B. 110000 Total A A A A A A 4 4 4 4 4 4 4 44. Maintenance Capital Q Year 16 P The following pair of assets differ only in the MARR. The problem asks you to determine the effect of this difference on the economic life and to explain the result. All assets decline in value by 20 percent of current each year. Installation costs are zero for all assets. Further data concerning the four pairs of assets are given in the table that follows. Asset A B First Cost $135,000 Initial Operating Cost $35,000 $135,000 $35,000 Rate of Operating Cost Increase 13.5%/year 13.5%/year MARR 5% 25% a. Determine the economic lives for assets A and B. b. Create a diagram showing the EAC(capital), the EAC(operating), and the EAC(total) for assets A and B. c. Explain the difference in economic life between A and B. Click the icon to view the table of compound interest factors for discrete compounding periods when i = 5%. a. The economic life of asset A is (Type whole numbers.) years, and the economic life of asset B is years. b. Create a diagram for asset A. Choose the correct diagram below. O A. EAC (Asset A) Total 110000 DDDDDDD Maintenance Capital A A EAC (Asset A) C. 0 Year 16 D. B. 110000 Total A A A A A A 4 4 4 4 4 4 4 44. Maintenance Capital Q Year 16 P
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