Quiz1_Spring09 - tious; it expects a real MARR of 12% per...

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CHEE 5369/6369 Quiz # 1 (Closed Bo - ok) Tuesday, January 27, 2009 Abbott Mining Systems wants to determine whether it should buy now or buy later for upgrading a piece of equipment used in deep mining operations. If the company selects plan N, the equipment will be purchased now for $200,000. However, if the company selects plan L, the purchase will be deferred for 3 years when the cost is expected to rise rapidly to $340,000. . Abbott is ambi-
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Unformatted text preview: tious; it expects a real MARR of 12% per year. The inflation rate in the coun-try has averaged 6.75 % per year. From only an economic perspective, determine whether the company should purchase now or later (a) when inflation is not considered and (b) when inflation is co r lSiCkred. : 5 ~ I O 00 _ I-r ; : )-~ ~ l q_n Y-I ' ) ' 1 , / 1-l . L-X ?-:: ~?-< > I D 0 0 1 ) 1 ~ , h o f 5...
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This note was uploaded on 04/13/2011 for the course CHEE 5369 taught by Professor Alim during the Spring '11 term at University of Houston.

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