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:

Dizygotic Twins

Also known as fraternal twins, these are siblings born at the same time due to the fertilization of two different eggs by two different sperm.

Monozygotic Twins

Twins that are genetically identical because they were formed from a single zygote splitting into two.

Fraternal Twin

Siblings born at the same time who have developed from two different eggs fertilized by two different sperm cells, making them genetically unique from each other.

Hemophilia

An X-linked chromosomal disorder involving abnormal blood clotting.