Allied Electronics must purchase a new automatic soldering machine to meet increased demand for its electronic goods. Of all the machines considered, management has narrowed the choices to the following three, which are mutually exclusive:

Allied Electronics uses a 4-year planning horizon, and MARR is 12 percent/year. Based on a present worth analysis, determine which machine should be purchased.

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Machine 1 Machine 2 Machine 3 Initial Cost $800,000 Annual Operating Cost $50,000 $650,000 $90,000 $575,000 $105,000 Salvage Value $40,000 $32,500 $28,750