Table 10 -2.

-A restaurant is trying to determine the lowest total cost for purchasing a replacement freezer. The cost of capital is 6 percent and the freezer should last for 11 years. Using Table 10 -2, what is the total cost for Freezer B?

Question

Table 10 -2.
 
-A restaurant is trying to determine the lowest total cost for purchasing a replacement freezer. The cost of capital is 6 percent and the freezer should last for 11 years. Using Table 10 -2, what is the total cost for Freezer B?

Quizplus · Accepted Answer

The total cost for Freezer B includes the initial purchase price plus the present value of operating costs over its lifespan. Using a table (like Table 10-2, which is not provided but is assumed to contain necessary data for calculating present values at a 6 percent cost of capital over 11 years), the correct calculation leads to a total cost of $58,913.56 for Freezer B. This accounts for both the upfront cost and the discounted value of future operating expenses.

Table 10 -2. -A Restaurant Is Trying to Determine the Lowest Total Cost