Solution-What is the annualized cost of the lrp cars

What is the annualized cost of the lrp cars

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Reference no: EM133039574

Question - The Capital Metro Transit (CMT) is trying to decide between light rail cars manufactured by two different companies. LR Power (LRP) cars cost more to buy initially, but they are expected to last for 10 years. Desire Streetcar Inc. (DSI) cars are cheaper initially, but they will wear out in six years. The revenue generated by the cars will not differ between choices. The cost figures related to each of the choices are presented below. The cost of capital is 8%.

Year	LRP	DSI
0	$275,000	$195,000
1	$10,000	$15,000
2	$10,000	$15,000
3	$10,000	$15,000
4	$10,000	$15,000
5	$10,000	$15,000
6	$10,000	$15,000
7	$10,000
8	$10,000
9	$10,000
10	$10,000

Required -

1. What is the Annualized Cost of the LRP cars?

2. What is the Annualized Cost of the DSI cars?

Reference no: EM133039574

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What is the annualized cost of the lrp cars

Reference no: EM133039574

Reference no: EM133039574

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