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1. Assume interest rate is 5% Prof. Chaos considers which device to purchase. Device A...

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Accounting

1. Assume interest rate is 5%

Prof. Chaos considers which device to purchase. Device A has the initial cost of $1,000, the useful life of 4 years, and the salvage value of $300. Device B has the initial cost of $205, the useful life is 2 years, and the upgrade cost of $205 in Year 1.

Assume that the analysis period is given by the least common multiple of useful lives.

What is the present worth of Device A?

2. Assume interest rate is 5%

Prof. Chaos considers which device to purchase. Device A has the initial cost of $1,000, the useful life of 4 years, and the salvage value of $300. Device B has the initial cost of $205, the useful life is 2 years, and the upgrade cost of $205 in Year 1.

Assume that the analysis period is given by the least common multiple of useful lives.

What is the annual worth of Device B?

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