MATH 2581 Lecture Notes - Fair Coin

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A company considers buying a machine that will replace 5 workers. , 600 each at the end of each month. The maintenance costs for the machine is , 400 monthly, its lifetime will be 20 years and will. If interest rate is j12 = have no scrap value. Machine 1 sells for , 000, and has an an- nual maintenance expense of , 000 and an estimated lifetime of 25 years with a resale value of , 000. Machine 2 has an annual maintenance fee of , 000 with no resale value. Machine 2 produces twice as fast as machine: if money is worth j1 = 8% and machine 2 is economically equivalent to machine 1, de- termine the price of machine 2. Robert buying a house has the option of pay- ing , 500 to have new gas furnace installed. Gas bills for the old furnace are expected to be.

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