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 value 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 First Cost A B EAC (Asset A) EAC (Asset A) $125,000 $125,000 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%. years, and the economic life of asset B is years. a. The economic life of asset A is (Type whole numbers.) b. Create a diagram for asset A. Choose the correct diagram below. O A. 110000 O C. Initial Operating Cost $35,000 $35,000 Total AAA 4 4 4 4 4 4 4 4 4 4 4 4 4 Maintenance Year Capital 110000 ▷▷ ADADADA Total 16 AUZAAAA Maintenance Capital Year **** 16 Rate of Operating Cost Increase 13.5%/year 13.5%/year Q Q MARR 5% 25% O B. EAC (Asset A) 110000DDDDDAAA O D. EAC (Asset A) 110000 Total 00000000000 ΥΔΔΔΔ Maintenance ******** Capital Year 16 Total AAAAA 4 4 4 4 4 4 4 4 4 4 4 Maintenance Capital Year do 16 Q Q E Q 2 Create a diagram for asset B. Choose the correct diagram below. OA. EAC (Asset B) 100000 O C. EAC (Asset B) 100000 Total ΔΔΔΔΔΔΔΔΔΔ Δ Δ Δ Δ Δ Δ O Maintenance ********** Capital Year Capital *** Total ΑΔΔΔΔΔΔΔΕΔΔΔΔΔΔΔ Maintenance Year 16 Q 5 Q G c. Explain the difference in economic life between A and B. The economic life is when the MARR is higher. O B. EAC (Asset B) 100000- O D. EAC (Asset B) 100000 Total ΔΔΔΔΔΔΔ Δ Δ Δ ΔΔΔΔΔΔ Maintenance Year > Capital Total ΔΔΔΔΔΔΔΔΔΔΔΔΔΔΔΔ Maintenance Year 16 Capital 16 Q Q [ Q Q [ 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 value 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 First Cost A B EAC (Asset A) EAC (Asset A) $125,000 $125,000 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%. years, and the economic life of asset B is years. a. The economic life of asset A is (Type whole numbers.) b. Create a diagram for asset A. Choose the correct diagram below. O A. 110000 O C. Initial Operating Cost $35,000 $35,000 Total AAA 4 4 4 4 4 4 4 4 4 4 4 4 4 Maintenance Year Capital 110000 ▷▷ ADADADA Total 16 AUZAAAA Maintenance Capital Year **** 16 Rate of Operating Cost Increase 13.5%/year 13.5%/year Q Q MARR 5% 25% O B. EAC (Asset A) 110000DDDDDAAA O D. EAC (Asset A) 110000 Total 00000000000 ΥΔΔΔΔ Maintenance ******** Capital Year 16 Total AAAAA 4 4 4 4 4 4 4 4 4 4 4 Maintenance Capital Year do 16 Q Q E Q 2 Create a diagram for asset B. Choose the correct diagram below. OA. EAC (Asset B) 100000 O C. EAC (Asset B) 100000 Total ΔΔΔΔΔΔΔΔΔΔ Δ Δ Δ Δ Δ Δ O Maintenance ********** Capital Year Capital *** Total ΑΔΔΔΔΔΔΔΕΔΔΔΔΔΔΔ Maintenance Year 16 Q 5 Q G c. Explain the difference in economic life between A and B. The economic life is when the MARR is higher. O B. EAC (Asset B) 100000- O D. EAC (Asset B) 100000 Total ΔΔΔΔΔΔΔ Δ Δ Δ ΔΔΔΔΔΔ Maintenance Year > Capital Total ΔΔΔΔΔΔΔΔΔΔΔΔΔΔΔΔ Maintenance Year 16 Capital 16 Q Q [ Q Q [

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The following Pair of assets differs only in MARR effect of this difference Clonomic lif depreciat 2... View the full answer