Question

You are to consider the following projects. Which project would you approve if each project creates the same income? Assume i = 8%, and a period of 10 years.

Project X Project Y
Initial cost $65,000 $90,000
Annual operating cost $16,000 $11,000
Annual maintenance cost $5,000 $3,000
Salvage value at the end of 10 years $10,000 $15,000

Answer

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