Item15
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Item 15
A forklift will last for only 2 more years. It costs $5,000 a year to maintain. For $20,000 you can buy a new lift that can last for 10 years and should require maintenance costs of only $2,000 a year.
a-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 4% per year. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
a-2. Should you replace the forklift?
b-1. Calculate the equivalent cost of owning and operating the forklift if the discount rate is 12% per year. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b-2. Should you replace the forklift?