What do you recommend he should do

Reference no: EM132172671

Question: Mr. "X", a friend of yours, is asked to invest in either of the following two mutually exclusive projects. His MARR is 10%.

a. A car repair system is offered with an initial cost of $30,000 and a net annual income of $15,000. The system will have a salvage value of $9,000 at the end of its three-year life.

b. A car cleaning operation is offered with $40,000 initial cost, net annual income of $20,000 for the first three years, and $5,000 for the last three years of its life. Its salvage value at the end of its six-year life is $6,500. What do you recommend he should do?

Reference no: EM132172671

Questions Cloud

Employee happiness and productivity in UAE : Develop a detailed research report relevant to the UAE context of Leadership and/or Organizational Development - review clearly establishing the contribution

Difference between a relation schema and a relation instance : Explain the difference between a Relation Schema and a Relation Instance, Database Management System

Critically evaluate and apply marketing principles : LB5232 -Marketing and Customer Engagement - Critically evaluate and apply marketing principles and theories to selected real life organisations and case studies

Establish a cosmetic store with given initial cost : Establish a cosmetic store with an initial cost of $100,000 and an annual net income of $20,000; the business is estimated to have a resale value

What do you recommend he should do : A car cleaning operation is offered with $40,000 initial cost, net annual income of $20,000 for the first three years, and $5,000 for the last three years.

Calculate the net present worth : Production equipment is bought at an initial price of $10,000. The annual operation and maintenance cost is $100. The salvage value at the end of the 15-year.

Calculate the npw by using given data : Equipment is bought for an initial cost of $20,000. Its operation will result in a net income of $6,000/ for the first year, increasing by $1,000 each year.

How much more will you gain or lose per year : The local bank advertised an investment program with an annual 16% interest rate, compounded quarterly. You can also choose to invest your money.

What annual effective rates of interest had the bank given : Mr. X deposited $1,500 in a savings account at the local bank and went on assignment overseas. After two years, he returned and noticed he had $1,800.

User Account

All Pages