Explore BrainMass
Share

PV of cash flows

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

A consulting engineering firm is considering two models of SUVs for the company principals. A GM model will have a first cost of $26,000, an operating cost of $2000, and a salvage value of $12,000 after 3 years. A Ford model will have a first cost of $29,000, an operating cost of $1200, and a $15,000 resale value after 3 years. At an interest rate of 15% per year, which model should the consulting firm buy? Conduct an annua worth analysis.

© BrainMass Inc. brainmass.com October 16, 2018, 2:16 am ad1c9bdddf - https://brainmass.com/economics/output-and-costs/pv-cash-flows-280869

Solution Preview

See the attached file. Thanks

"A consulting engineering firm is considering two models of SUVs for the company principals. A GM model will have a first cost of $26,000, an operating cost of $2000, and a salvage value of $12,000 after 3 years. A Ford model will have a first cost of $29,000, an operating cost ...

Solution Summary

PV of cash flows is determined.

$2.19