Two machines produce the same product, but with differing levels of quality. Machine A costs $20K with
Fantastic news! We've Found the answer you've been seeking!
Question:
Two machines produce the same product, but with differing levels of quality. Machine A costs $20K with a useful life of 12 years and salvage value of $4K. Annual receipts are expected to be $150K with disbursments of $138K. Machine B, producing a higher quality product, costs $30K with a useful life of 8 years and no salvage value. Annual receipts are expected to be $188K with disbursements of $170K.
Assuming a MARR of 10%, tax rate of 21%, and using straight-line depreciation (ignoring the half-year rule), determine which machine is preferred. Present your analysis in terms of:
a) present worth
b) annual worth
c) internal rate of return.
Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Posted Date: