Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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An interest rate of 15% is used to evaluate a
new system that has a first cost of $212,400,
annual operating
and maintenance costs of $41,200, annual
savings of $94,600, a life of 6 years, and a
salvage value of
$32,500. After initial evaluation, the firm
receives word from the vendor that the first
cost is 5% higher
than originally quoted. The percentage error
in the system' s present worth from this is
closest to what
value?
(a) 5%
(b) 15%
(c) 100%
(d) 300%
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Transcribed Image Text:An interest rate of 15% is used to evaluate a new system that has a first cost of $212,400, annual operating and maintenance costs of $41,200, annual savings of $94,600, a life of 6 years, and a salvage value of $32,500. After initial evaluation, the firm receives word from the vendor that the first cost is 5% higher than originally quoted. The percentage error in the system' s present worth from this is closest to what value? (a) 5% (b) 15% (c) 100% (d) 300%
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