A Bank Can Purchase an ATM (Automated Teller Machine) for $110,000

question 98

Essay

A bank can purchase an ATM (automated teller machine) for $110,000 that has an estimated life of six years.Maintenance over that period will begin at $2,500 annually and increase at a 10 percent rate.If the ATM is purchased the bank will not be required to hire one additional (human) teller.Including fringe benefits, the teller costs $18,000 per year, and this amount is expected to increase 5 percent annually.If the bank's cost of capital is 10 percent, which alternative should be selected?

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Definitions:

Taste Cells

Specialized sensory cells located on the taste buds of the tongue, responsible for perceiving different flavors such as sweet, salty, bitter, and sour.

Gustav Fechner

A German scientist who founded psychophysics and proposed the Fechner's law, relating physical stimuli to the sensation of their intensity.

Correct Rejection

In signal detection theory, the decision to correctly identify the absence of a signal or stimulus.

Miss

To fail to hit, reach, catch, or otherwise make contact with something; can also refer to feeling sadness from the absence or loss of someone or something.