Assume an annual interest rate of 7. which of the two units, Ask an Expert

Economics

Compare two units, A and B. A has a new cost of $42,000, a life expectancy of 14 years, a salvage value of $4000, and an annual operating cost of $3000. B has a new cost of $21000, a life expectancy of 7 years, a salvage value of $2000, and an operating cost of $5000. Assume an annual interest rate of %7. Which of the two units would you recommend ? What initial cost of machine A woul make the two machines identical in overal cost?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9440737

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