Sunshine will be using an equipment for her project. She wants to determine which equipment is better. The pertinent data for the two equipment are as follows: Equipment A Equipment B First Cost...

Sunshine will be using an equipment for her project. She wants to determine which equipment
is better. The pertinent data for the two equipment are as follows:

                                   Equipment A                  Equipment B

First Cost                        50,000                             150,000

Salvage Value                    2,000                              6,000

Annual Maintenance         6,000                               3,000

Economic Life                      5                                       15

The maximum rate of return for both equipment is 12% per annum. Use sinking fund method of depreciation.

1. Determine the annual cost of Equipment A.


2. Determine the present worth of Equipment B.


3. What is the rate of return for the additional investment on equipment B?