Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:A company engaging in selling of laboratory equipment estimates that profit from sales should increase by *2,00, 000 per year if a mobile demonstration unit is built. A large
unit with sleeping accommodation for the driver will cost 9, 70,000 while a smaller unit without sleeping cabin will be Rs. 6,30,000. Salvage values for the large and small
units after 5 years will be, 197,000 and Rs.35000 respectively. Lodging costs saved by the larger unit should amount 1, 10,000 annually, but its transportation costs will
exceed those of the smaller unit by 31, 000. With the money at 9% should a mobile demonstration unit be built? And if so which size is preferable? Use net annual worth to
determine which is better and show all the steps and working
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