National Homebuilders, Inc., plans to purchase new cut-and-finish equipment. Two

Question

National Homebuilders, Inc., plans to purchase new cut-and-finish equipment. Two manufacturers offered the estimates below. If MARR-15%, the equation for computing the present worth of vendor A is First Cost,$ Annual cost, $ per year Salvage Value, $ Life, years Vendor A 15,000 -3500 1000 3 Vendor E 18000 -3100 2000 4 O Pw-15000(P/E 15%, ?)-15000(P/F,15%, 6)-15000(P/E 15%, 9)+1000(P/F, 15%, 3-1000P/F,15%, 6)+1000(P/F, 15%, 9)+ 1000(P/F, 15%, 12)-3500(P/A,15%, 12) d PVV--15000-15000(P/F, 15%, 3)-15000(P/F,15%, 6)-15000(P/F, 15%, 9)-15000(P/F, 15%, 12) +1000(P/F, 15%, 3)+1000(P/F, 15%, 6)+ 1000(P/F, 1596, 9)+ 1000(P/F, 15%, 12-3500(P/A,15%, 12) Pw--15000-15000P/F, 15%, 3)-15000(P/F15%, 6-15000(PF, 15%, 9)+1000(PF,15%, ?)+1000P/ 1596, 6)+1000(P/E 1596, 9)+1000(P/E 15%, 12-3500(P/A,15%, 12) O O Pw--15000-15000(P/E 15%, 3-15000(P/F15%, 6-15000P/F,15%, 9-1000(PF,15%, 3-1000P/ 15%, 6)+1000(P/F, 1596, 9-3500(P/A,15%, 12)

Explanation / Answer

Option 2

The initial cost is represented by P/F, i,n

Operating cost is represented by P/A,i,n

Salvage vaue is represented by P/F,i,n

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