You and your partner have become very interested in cross-country motorcycle racing and wish to purchase entry-level equipment. You have identified two alternative sets of equipment and gear. Package K has a first cost of $200,000, an operating cost of $9,000 per quarter, and a salvage value of $30,000 after its 2-year life. Package L has a first cost of $260,000 with a lower operating cost of $3,000 per quarter and an estimated $20,000 salvage value after its 4-year life. Which package offers the lower present wort analysis at an interest rate of 12% per year, compounded quarterly? The present worth of package K is $ and that of package L is $ Package L offers the lower present worth.

ENGR.ECONOMIC ANALYSIS
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Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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You and your partner have become very interested in cross-country motorcycle racing and wish to purchase entry-level equipment.
You have identified two alternative sets of equipment and gear. Package K has a first cost of $200,000, an operating cost of
$9,000 per quarter, and a salvage value of $30,000 after its 2-year life. Package L has a first cost of $260,000 with a lower operating
cost of $3,000 per quarter and an estimated $20,000 salvage value after its 4-year life. Which package offers the lower present worth
analysis at an interest rate of 12% per year, compounded quarterly?
The present worth of package K is $
and that of package L is $
Package L
offers the lower present worth.
Transcribed Image Text:You and your partner have become very interested in cross-country motorcycle racing and wish to purchase entry-level equipment. You have identified two alternative sets of equipment and gear. Package K has a first cost of $200,000, an operating cost of $9,000 per quarter, and a salvage value of $30,000 after its 2-year life. Package L has a first cost of $260,000 with a lower operating cost of $3,000 per quarter and an estimated $20,000 salvage value after its 4-year life. Which package offers the lower present worth analysis at an interest rate of 12% per year, compounded quarterly? The present worth of package K is $ and that of package L is $ Package L offers the lower present worth.
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