The Crockett Land Winery must replace its present grape-pressing equipment. The two alternatives are the Quik-Skwish and the Stomp-Master. The annual operating costs increase by 15% each year as the machines age. If the interest rate is 8%, what is the net present cost for the Quik-Skwish machine?
|
Quick-Skwish |
Stomp-Master |
| First cost |
$350,000 |
$500,000 |
| Annual operating costs |
30,000 |
25,000 |
| Salvage value |
35,000 |
50,000 |
| Useful life, in years |
5 |
10 |