You and your partner have become very interested in cross-country motorcycle racing and wish to purchase entry-level equipment. You have identified two alternative sets of equipment and gear. Package K has a first cost of $140,000, an operating cost of $9,000 per quarter, and a salvage value of $40,000 after its 2-year life. Package L has a first cost of $220,000 with a lower operating cost of $3,500 per quarter and an estimated $24,000 salvage value after its 4-year life. Which package offers the lower present worth analysis at an interest rate of 8% per year, compounded quarterly? Which alternative should be selected? (A) Package L

You and your partner have become very interested in cross-country motorcycle racing and wish to purchase entry-level equipment. You have identified two alternative sets of equipment and gear. Package K has a first cost of $140,000, an operating cost of $9,000 per quarter, and a salvage value of $40,000 after its 2-year life. Package L has a first cost of $220,000 with a lower operating cost of $3,500 per quarter and an estimated $24,000 salvage value after its 4-year life. Which package offers the lower present worth analysis at an interest rate of 8% per year, compounded quarterly? Which alternative should be selected? (A) Package L

Fundamentals Of Construction Estimating

4th Edition

ISBN:9781337399395

Author:Pratt, David J.

Publisher:Pratt, David J.

Chapter9: Pricing Construction Equipment

Section: Chapter Questions

Problem 8RQ

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How did you get the average cost for this question? the question is from (Engineering economics analysis, p39)