Math 242-Sec. 6.1 lecture notes -MATH 242 (winter 2015 Math242winter-Kazaras 6.3

Question

Math 242-Sec. 6.1 lecture notes -MATH 242 (winter 2015 Math242winter-Kazaras 6.3 Improper Integrals 9 MATHEMATICAL ASSOCIATION 0F AMERICA webwork math242winter-kazaras 6.3 improper integrals 9 6 3 Improper Integrals: Problem 9 Prev Up Next (1 p) The capitalized cost of an assset is the sum of the original cost of the asset and the present value of maintaining the asset. Suppose a company is considering the purchase of two different machines. Machine 1 costs s20000 and t years from now will cost M 1000(1 0.07) dollars to maintain. Machine 2 costs only $5000, but its maintenance cost at time t is M2() 1200 dollars. If the cost of money is 7% per year compounded continuously, what is the capitalized cost of each machine? Machine 1 cost: dollars. Machine 2 cost: dollars Note: You can earn partial credit on this problem. You have attempted this problem 0 times. You have unlimited attempts remaining. Emal nstructor

Explanation / Answer

Cost of first machine = Purchase cost + maintenance

= 20000+1000(1+0.07t) dollars

Cost of II machine = 5000+1200 =6200

Capitalised cost for machine 2 @7% continuously say for 5 years=93609.46

Obviously the second machine is better than the first one.

= 12763.50

Capitalised cost for I machine @ 7% continuously say for 5 years

=

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