A company is considering investing $17,500 in a heat exchanger. The heat exchanger will last five years, at which time it will be sold for $2,000. The maintenance cost at the end of the first year is...

Extracted text: A company is considering investing $17,500 in a heat exchanger. The heat exchanger will last five years, at which time it will be sold for $2,000. The maintenance cost at the end of the first year is estimated to be $1,500. Maintenance costs for the exchanger are estimated to increase by $1,000 per year over its life. As an alternative, the company may lease the equipment for $X per year, including maintenance, with the annual payments to made at the end of each year. a. Choose cash flow diagrams of both alternatives. b. For what value of X should the company lease the heat exchanger? The company expects to earn 8% on its investments. Assume end-of-year lease payments. Click the icon to view the interest and annuity table for discrete compounding when i= 8% per year. a. What is the cash flow diagram of the lease alternative? Choose the correct answer below. OA. OB. $10,000 EOY $10,000 EOY 2 3. 4. 1 2 4. X X


Extracted text: OC. OD. EOY ΕΟΥ 1 3 0. 1 4 X X X X.