Question: A manufacturing concern requires a drilling machine to drill an iron sheet of 30mm thickness. To address this need, two mutually exclusive drilling machines are

A manufacturing concern requires a drilling machine to drill an iron sheet of 30mm thickness. To address this need, two mutually exclusive drilling machines are being considered. Doing nothing is not an option. Refer to the data below and state your key assumptions in working out this problem.
a. Use the PW method to determine which drill should be selected when the is 18% per year.

b. Which system should be selected when the MARR is 15% per year?

Drill 1 Drill 2 Capital investment Annual revenues $2,000 $2,800 5500 600 $150 $200 $0 Annual Expenses Market value at the end $400 of useful life Useful life 5 years 10 years

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a PW 1 8 100000 80000PF 8 5 20000PF 8 10 28000PA 8 10 42699 PW 2 8 150000 ... View full answer

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