Bob is considering buying a new farming tractor for his farm. He hasa choice between a John-Deere-XP tractor and a Sunflower-FTtractor. Bob has a MARR of 5%.John-Deere-XP:First Cost: $150,000.Life: 10 years, zero salvage value at the endof 10 years.Annual Expense (maintenance, charging,etc.): $3,000.Sunflower-FTFirst Cost: $200,000.Life: 15 years, zero salvage value at the endof 15 years.Annual Expense (maintenance, charging,etc.): $3,500.For a 10-year study period, what salvage value for the extra 5 yearsof life for Sunflower-FT would result in that both tractors areequivalent in Present Worth?$87,734.1$80,015.8$105,266.$96,133.6$115,190.

In equipment there is depreciation of equipment each year due to which value goes on decreasing as…

choice between a John-Deere-XP tractor and a Sun ctor. Bob has a MARR of 5%. hn-Deere-XP: First Cost: $150,000. Life: 10 years, zero salvage value 10 years. Annual Expense (maintenance, c c.): $3,000. unflower-FT First Cost: $200,000. Life: 15 years, zero salvage value

choice between a John-Deere-XP tractor and a Sun ctor. Bob has a MARR of 5%. hn-Deere-XP: First Cost: $150,000. Life: 10 years, zero salvage value 10 years. Annual Expense (maintenance, c c.): $3,000. unflower-FT First Cost: $200,000. Life: 15 years, zero salvage value

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Bob is considering buying a new farming tractor for his farm. He has
a choice between a John-Deere-XP tractor and a Sunflower-FT
tractor. Bob has a MARR of 5%.
John-Deere-XP:
First Cost: $150,000.
Life: 10 years, zero salvage value at the end
of 10 years.
Annual Expense (maintenance, charging,
etc.): $3,000.
Sunflower-FT
First Cost: $200,000.
Life: 15 years, zero salvage value at the end
of 15 years.
Annual Expense (maintenance, charging,
etc.): $3,500.
For a 10-year study period, what salvage value for the extra 5 years
of life for Sunflower-FT would result in that both tractors are
equivalent in Present Worth?
$87,734.1
$80,015.8
$105,266.
$96,133.6
$115,190.

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