A factory manager is considering the purchase of one of the following two production equipment. Cash flow estimates for equipment A are in year-zoro dollars while those of equipment B are in actual dollarsEquipment A(year-zero S)Equipment B(actual $)$1,200Initial investment$9,500Net annual revenue$3.000$4,000$0Market value at end of useful lifeUseful ife, years1111The manager uses a market interest rate of 12% per year. If inflation rate is expected to average 5.66% per year over the next several years, determine the PW of each equipment.1. The PW of Equipment A isOA. S14,161OB. $14,578OC. $12,500OD. $0,3132. The PW of Equipment B isO A. $20,347OB. S15,200OC. $20,903OD. $12,651

Given, Equipment A: Initial investment = $9,500 Net annual revenue = $3,000 Useful life = 11 years…

A factory manager is considering the purchase of one of the following hwo production equipment. Cash flow estimates for equipment A are in year-zero dollars while those of equipment B are in actual dollars Equipment A (year-zero S) $0,500 Equipment (actual S) $11.200 Intial investment Net annual revenue $3,000 $4,000 Market value at end of useful life Useful ife, years 11 11 The manager uses a market interest rate of 12% per year. If inflation rate is expected to average 5.66% per year over the next several years, determine the PW of each equipment. 1. The PW of Equipment Ais OA S14,101 OB. $14,578 OC. $12,500 OD. S8,313 2. The PW of Equipment Bis OA S20,347 OB. $16,200 OC. $20.903 OD. $12.51

A factory manager is considering the purchase of one of the following hwo production equipment. Cash flow estimates for equipment A are in year-zero dollars while those of equipment B are in actual dollars Equipment A (year-zero S) $0,500 Equipment (actual S) $11.200 Intial investment Net annual revenue $3,000 $4,000 Market value at end of useful life Useful ife, years 11 11 The manager uses a market interest rate of 12% per year. If inflation rate is expected to average 5.66% per year over the next several years, determine the PW of each equipment. 1. The PW of Equipment Ais OA S14,101 OB. $14,578 OC. $12,500 OD. S8,313 2. The PW of Equipment Bis OA S20,347 OB. $16,200 OC. $20.903 OD. $12.51

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 6MAD: Assume Home Garden Inc. in MAD 26-5 assigns the following probabilities to the estimated...

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