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Question 4
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North City must choose between two new snow-removal machines. The SuperBlower has a $70k first cost, a 20-year life, and an $8000 salvage value. At the end of 9 years, it will need a major overhaul costing $19,000. Annual maintenance and operating costs are $9000, and estimated to increase by 3% each year. The Sno-Mover will cost $50,000, has an expected life of 10 years, and has no salvage value. The annual maintenance and operating costs are expected to be $12,000, and will increase by $200 each year. You are wanting to conduct an equivalent uniform annual worth analysis to compare the alternatives. You are trying to decide how to capture the maintenance and operating costs for each of the machines.
A) For the SuperBlower, which factor(s) is/are needed to make the maintenance and operating costs an Equivalent Uniform Annual Cost? Check all that apply.
- Uniform Series Present Worth (P/A,i,n)
- Geometric Series Present Worth (P/A1, g,i,n)
- Arithmetic Gradient Present Worth (P/G,i,n)
- Arithmetic Gradient Uniform Series (A/G,i,n)
- Capital Recovery Factor (A/P,i,n)
- No factor needed
B) For the SnoMover, which factor(s) is/are needed to make the maintenance and operating costs an Equivalent Uniform Annual Cost in the shortest possible way. Check all that apply.
- Uniform Series Present Worth (P/A,i,n)
- Geometric Series Present Worth (P/A1, g,i,n)
- Arithmetic Gradient Present Worth (P/G,i,n)
- Arithmetic Gradient Uniform Series (A/G,i,n)
- Capital Recovery Factor (A/P,i,n)
- No factor needed