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A Large tower crane was purchased two years ago for $175,000. The company wants to purchase...

A Large tower crane was purchased two years ago for $175,000. The company wants to purchase a recently available crane with greater lift capacity for $215,000. The presently owned crane can be sold today for $150,000. its operating costs over the past 2 years have been $25,000 per year. The value that should be used as P for the presently owned crane is:

a. $215,000

b. $30,000

c. $225,000

d. $150,000

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Answer #1

Answer - Option C

$ 225000

The total present value of P can be calculated as $ 175000 + 25000 + 25000

= $ 225000

The operating costs are also to be considered

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