20. An electric utility is taking bids on the purchase, installation, and operation of microwave towers. The following table has some details associated with the two bids that were received. Cost per Tower Equipment cost Installation cost Annual maintenance and inspection fee Annual extra income taxes Life Salvage value Bid A $112,000 $25,000 $2,000 40 years $0 Bid B $98,000 $30,000 $2,500 $800 35 years $0 a. Which is the most economical bid if the interest rate is considered to be 11%? Neither tower will have any salvage value after 20 years of use.

20. An electric utility is taking bids on the purchase, installation, and operation of microwave towers. The following table has some details associated with the two bids that were received. Cost per Tower Equipment cost Installation cost Annual maintenance and inspection fee Annual extra income taxes Life Salvage value Bid A $112,000 $25,000 $2,000 40 years $0 Bid B $98,000 $30,000 $2,500 $800 35 years $0 a. Which is the most economical bid if the interest rate is considered to be 11%? Neither tower will have any salvage value after 20 years of use.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter14: Pricing Techniques And Analysis

Section: Chapter Questions

Problem 1.1CE: What life cycle cost concept begins raising concerns by year 5 with any electric vehicle (EV)? If...

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