Question 15 1 out of 1 point The Queen Enterprise wants to purchase a large rota

Question

Question 15 1 out of 1 point The Queen Enterprise wants to purchase a large rotary screw air compressor. The company has looked at models of two major manufacturers: Ingersoll-Rand and DeWalt. The projected cash flows for each are shown below: urchase rice ($) 300 500 Salvage Value ($) 1,000 ain 1 Supplier Ingersoll-Rand DeWalt r. r.2 r. 14 14 750 Calculate the total cost of ownership (TCO) for the Ingersoll-Rand compressor, with an annual discount rate of 12% Selected Answer b, -$41,385 a. -$45,539 b. -S41,385 c. -$55,105 d. -$52,541 e. -$43,378 Answers

Explanation / Answer

Total cost of ownership is mentioned as NPV (salvage value) - purchase cost - NPV(operating & maintenance cost)

Given discount rate is 12%, therefore the calculations for question 15 are as follows:

Correct answer with having same factor for salvage value and last year is as follows:

As per policy one question at a time please.

Supplier Purchase Yr1 Yr2 Yr3 Yr4 Yr5 Salvage Ing.Rand 2300 11000 11000 11000 11000 11000 1000 DeWalt 2500 14000 14000 14000 14000 14000 750 NPV factor 1 0.892857 0.797194 0.71178 0.635518 0.567427 0.506631 TCO NPV(Ing.R) -2300 -9821.43 -8769.13 -7829.58 -6990.7 -6241.7 506.6311 -41445.9 NPV(De.) -2500 -12500 -11160.7 -9964.92 -8897.25 -7943.98 379.9733 -52586.9

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