A Machine Costs $10,000,has No Scrap Value at the End

question 27

Multiple Choice

A machine costs $10,000,has no scrap value at the end of 10 year estimated lifetime.Maintenance is $500 per year.How much can be spent on increasing the machine's productivity by 50%,if the salvage value remain same? If this is done,the annual maintenance cost would increase to $800 per year and the machine's lifetime would decrease to 8 years.The cost of capital is j₁ = 10%.

• A)$2757
• B)$5909
• C)$4790
• D)$6536

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