Two pumps are being considered for pumping water from a reservoir. Installed cost and salvage value...
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Two pumps are being considered for pumping water from a reservoir. Installed cost and salvage value for the two pumps are given below. Installed Cost Salvage Value Pump A Pump B $20,000 $2,000 $25,000 $4,000 Pump A has a service life of 4 years. Determine the service life of pump B at which the two pumps are competitive if the annual effective interest rate is 15%. To be competitive, pump B must have the same capitalized cost as pump A. Two pumps are being considered for pumping water from a reservoir. Installed cost and salvage value for the two pumps are given below. Installed Cost Salvage Value Pump A Pump B $20,000 $2,000 $25,000 $4,000 Pump A has a service life of 4 years. Determine the service life of pump B at which the two pumps are competitive if the annual effective interest rate is 15%. To be competitive, pump B must have the same capitalized cost as pump A.
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The capitalised cost of a project is the present value of all costs and benefits over the service life of the project discounted at the effective inte... View the full answer
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