A company purchases a piece of manufacturing equipment

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A company purchases a piece of manufacturing equipment for rental purposes. The expected income is 10,000, the first year and increases 100 every year thereafter. Its useful life is 6 years. Expenses are estimated to be 2,000 annually. The purchase price is 75,000 and there is a salvage value of 10,000. What is the equivalent annual worth of this investment alternative with an interest rate of 6%?

a. EAW = 2,911.66
b. EAW = 1,764.78
c. EAW = -5,587.96
d. 235.22

Reference no: EM13336835

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