(Solve using Excel only and show your work done in Excel) Two storage structures, given...
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(Solve using Excel only and show your work done in Excel)
Two storage structures, given code names Y and Z, are being considered for a military base. The military uses a 13% per year expected rate of return and a 24-year life for decisions of this type. The relevant characteristics for each structure are shown below.
First Cost
30754
35445
Estimated Life
12 years
24 years
Estimated Salvage Value
None
1800
Annual Maintenance Cost
1000
720
a)What is the future worth of each machine?
b)What is the decision rule for determining the preferred machine based on future worth ranking?
c)Which structure should be recommended?
d)Plot a graph for both alternatives future worth changes with expected ARR (annual rate of return) if expected annual rate of return varies from 13% to 16%
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