Question

Boris is considering buying a new lawnmower. He has a choice between X mower and a...


Boris is considering buying a new lawnmower. He has a choice between X mower and a Y mower. The salvage value of each mower at the end of its service life is zero.

X

Y

First Cost

$350

$120

Life

10 years

4 years

Annual Gas

$60

$40

Annual Maintenance

$30

$60

Find which alternative is preferable using the IRR method and a MARR of 5 percent. Answer the following question by using present worth computations to find the IRRs. Use the least common multiple of service lives. Which of the two alternatives should be chosen? Use the ERR method if necessary.

(It is important to use least common multiple of service lives in this question.)

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider the three mutually exclusive alternatives below. At the end of their useful lives, Alternatives X...
Consider the three mutually exclusive alternatives below. At the end of their useful lives, Alternatives X and Z will be replaced with identical replacements so that a 10-year service requirement is met. If the MARR is 3% per year, which alternative (if any) should be chosen based on the annual worth method? Alt X Alt Y Alt Z Capital investment $300,000 $425,000. $500,000. Annual savings $68,750 $108,750. $188,750. Salvage value $90,000 $125,000. $140,000. Life, years 10 20 5
A young software genius is selling the rights to a new video game he has developed....
A young software genius is selling the rights to a new video game he has developed. Two companies have offered him contracts. The first contract offers 8,000 at the end of each year for the next five years, and then 18,000 dollars per year for the following 10 years. The second offers 10 payments, starting with 9,500 at the end of the first year, 12,500 dollars at the end of the second year, and sof forth, increasing by G dollars...
Drain Your Brain, a local video arcade, is considering the addition of a new virtual reality...
Drain Your Brain, a local video arcade, is considering the addition of a new virtual reality system. Several different vendors have been contacted. The owner of the arcade, affectionately referred to by the patrons as Wizard, has narrowed his selection to one of three choices (mutually exclusive alternatives). The data below describes the three systems under evaluation. Annual costs are based on electricity consumed, replacement parts based on use, and preventive maintenance. Revenue estimates are provided by the vendors based...
We need to purchase construction equipment. We have the choice of purchasing: • Item A, which...
We need to purchase construction equipment. We have the choice of purchasing: • Item A, which has an initial cost of $75,000, an annual fuel cost of $ 6,000/year, annual maintenance cost of $2,000 at the end of the first year that increase thereafter by $200 per year and a salvage value of $10,000 at the end of its 8-year life, and • Item B, which has an initial cost of $100,000, an annual fuel cost of $ 5,500/year, annual...
  6. How much would I have in the bank at the end of 30 years if...
  6. How much would I have in the bank at the end of 30 years if I put $500 a year into an account and the interest rate was 4%. Show all work. 7. Use Benefit cost ratio analysis to determine the best alternative. Each alternative has an 6 year useful life. Assume 15% MARR. Show all work. A                     B                     C First cost                                 $560                $340                $120 Annual Benefit                        $140                $100                $40 Salvage                                    $40                  $0                    $0 8. Kruber company located Tennessee...
Q6) A new machine purchased by a firm has an initial cost of $30,000, annual operating...
Q6) A new machine purchased by a firm has an initial cost of $30,000, annual operating cost of $1,000 per year, and a salvage value of $5,000 after a 9 years recovery period. The firm uses MARR of 15% per year. Determine a) the depreciation charge at year 4, and b) the book value at year 4 using the Straight Line (SL) method. Q7) From the information in Q6, calculate a) the depreciation charge at year 4, and b) the...
A new machine purchased by a firm has an initial cost of $30,000, annual operating cost...
A new machine purchased by a firm has an initial cost of $30,000, annual operating cost of $1,000 per year, and a salvage value of $5,000 after a 9 years recovery period. The firm uses MARR of 15% per year. Determine a) the depreciation charge at year 4, and b) the book value at year 4 using the Straight Line (SL) method.From the information in Q6, calculate a) the depreciation charge at year 4, and b) the book value at...
Harold Reese must choose between two bonds:    Bond X pays $76 annual interest and has...
Harold Reese must choose between two bonds:    Bond X pays $76 annual interest and has a market value of $840. It has 10 years to maturity. Bond Z pays $86 annual interest and has a market value of $800. It has three years to maturity. Assume the par value of the bonds is $1,000.    a. Compute the current yield on both bonds. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)...
Harold Reese must choose between two bonds: Bond X pays $85 annual interest and has a...
Harold Reese must choose between two bonds: Bond X pays $85 annual interest and has a market value of $780. It has 12 years to maturity. Bond Z pays $95 annual interest and has a market value of $800. It has five years to maturity. Assume the par value of the bonds is $1,000. a. Compute the current yield on both bonds. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) b. Which...
Multiple Choice Select the best answer from the available choices for each question. Which of the...
Multiple Choice Select the best answer from the available choices for each question. Which of the following is NOT part of the definition of a sample space S? S can be discrete or continuous Each outcome must be in S at most once Each element in S is equally likely Each outcome must be in S at least once S is a set of possible outcomes in an experiment Three A’s, three B’s, and two C’s are arranged at random...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT