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GingerSnaps
GingerSnaps
10.10.2019 • 
Business

Acompany is considering investing $20 comma 00020,000 in a heat exchanger. the heat exchanger will last five years, at which time it will be sold for $3 comma 0003,000. the maintenance cost at the end of the first year is estimated to be $2 comma 0002,000. maintenance costs for the exchanger are estimated to increase by $1 comma 0001,000 per year over its life. as an alternative, the company may lease the equipment for $x per year, including maintenance, with the annual payments to made at the end of each year. a. choose cash flow diagrams of both alternatives. b. for what value of x should the company lease the heat exchanger? the company expects to earn 1010% on its investments. assume end-of-year lease payments.

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