Three alternatives have the following cost data associated with them:DataAlt. 1Alt. 2Alt. 3Useful Life, Years101010First Cost$1,125,000$1,980,000$1,650,000Annual Benefit265,000589,000435,000Annual M&O Costs95,00097,00091,000Salvage Value145,000205,000178,000Determine whích machine is better to purchase, if i = 10%.1. Use a B/C2. Use a Payback Period

Benefit-Cost Ratio (B/C): This ratio shows the relationship between the benefits and costs for the…

Answered: Determine which machine is better to…

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Determine which machine is better to purchase, if i = 10%. 1. Use a B/C 2. Use a Payback Period

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Three alternatives have the following cost data associated with them:
Data
Alt. 1
Alt. 2
Alt. 3
Useful Life, Years
10
10
10
First Cost
$1,125,000
$1,980,000
$1,650,000
Annual Benefit
265,000
589,000
435,000
Annual M&O Costs
95,000
97,000
91,000
Salvage Value
145,000
205,000
178,000
Determine whích machine is better to purchase, if i = 10%.
1. Use a B/C
2. Use a Payback Period

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