The Crockett Land Winery must replace its present grape-pressing equipment. The 2 alternatives are the Stomp-Master and the Quik-Skwish. The annual operating costs increase by 15% each year as the machines age. If the interest rate is 9%, determine the net present cost for the Quik-Skwish machine?
|
Quick-Skwish
|
Stomp-Master
|
|
First cost
|
$350,000
|
$500,000
|
|
Annual operating costs
|
30,000
|
25,000
|
|
Salvage value
|
35,000
|
50,000
|
|
Useful life, in years
|
5
|
10
|