Determining which alternative is the best

Reference no: EM132062765

Question: The purchasing agent of a large geotechnical testing firm is trying to decide whether to buy high carbon steel or carbide-tipped drilling tools for the drills used in the field to get soil samples. The carbide tools cost $2,000 and have an estimated life of 3 years. The steel tools cost $1, 400 but only last 2 years. If the company's minimum attractive rate of return is 20%, which alternative is the best? Salvage values are zero.

a) Use the annual equivalent method

b) Use the present worth method

Reference no: EM132062765

Questions Cloud

How diversification is based on correlation : how diversification is based on correlation, why do you think people fail to diversify in the ways you have mentioned?

Find the price of the option half-way to maturity : Find the price of the option half-way to maturity if the share price at that time is 17.

Find the balance owed after the tenth payment : Find the balance owed after the tenth payment had been made.

Calculate equal monthly mortgage payments : You are purchasing a new house for $350,000. Y ou are required to pay 20% as down payment. In addition to the house price, the real-estate agent charges.

Determining which alternative is the best : The purchasing agent of a large geotechnical testing firm is trying to decide whether to buy high carbon steel or carbide-tipped drilling tools.

What do you mean by performance liquidated damages : What do you mean by performance liquidated damages? And what are the different ways used in the industry to calculate the damages,

Risk management strategies for the wheat trading : What are the risk management strategies for the wheat trading?

Determine the investment worth at the end of year : You have just purchased an investment that generates the cash flows shown below for the next four years. You are able reinvest these cash flows at 6.98 percent.

Find the value of current market price : You are purchasing a 10-year, zero-coupon bond. The yield to maturity is 8.68 percent and the face value is $1,000. What is the current market price?

User Account

All Pages