I can buy a Grapefruit laptop computer for $3 000, or a Doors laptop for $2 500. The Grapefruit has an expected life of five years, whereas the Doors is only expected to last four years. Both provide equivalent service. A four-year-old Grapefruit has a salvage value of $200. If my MARR is 10%, what is the present cost of choosing the Grapefruit over the Doors?
A)$300
B)$315
C)$363
D)$383
E)$636

Question

Quizplus · Accepted Answer

The present cost of choosing the Grapefruit over the Doors is calculated by comparing the net present costs of both options, considering the salvage value and the different lifespans. The Grapefruit's higher initial cost and salvage value, discounted at the MARR, results in a present cost difference of $363.

I Can Buy a Grapefruit Laptop Computer for $3 000