Question: A farmer is considering two different tractors for his business. Each tractor has a different price but also a different life span. The farmer will
A farmer is considering two different tractors for his business. Each tractor has a different price but also a different life span. The farmer will have to replace elther tractor at the end of its useful life and start again. We will assume that the farmer has a discount rate of 9.00%. MODEL A: Initial cost of $14,950.00, Yearly operating cost of $962.00 for 7.00 years. MODEL B: Initial cost of $12,707.00, Yearly operating cost of $1,503.00 for 10.00 years. What is the NPV of buying tractor A?(HINT: This will be a negative number) Submit Answer format: Currency: Round to: 2 decimal places
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