1. XYZ, Inc. is considering updating one of its existing machines. They will pick one from the following two machines. The first one costs $150,000 to install, $20,000 to operate per year for 10 years. It will be sold for $50,000 ten years after the installation (t=10). The second one costs $240,000 to install, $12,000 to operate per year for 16 years. It will be sold for $54,000 sixteen years after the installation (t=16). The firm’s cost of capital is 8%. What is the equivalent annual annuities of the best machine?
A. $39,158.61
B. $38,902.95
C. $37,465.61
D. $37,333.70
E. $35,068.25
2. Present Value of an Annuity Due If the present value of an ordinary, 2-year annuity is $5,300 and interest rates are 13 percent, what's the present value of the same annuity due?
$5,489
$5,300
$5,989
$4,800