The two machines shown are being considered for a chip manufacturing operation. Assume the MARR is a real return of 12% per year and that the inflation rate is 7% per year. Which machine should be selected on the basis of an annual worth analysis if the estimates are in

(a) Constant-value dollars,

(b) future dollars? Solve by hand and using a spreadsheet.

Transcribed Image Text:

Machine First cost, $ M&O, $ per year Salvage value, $ Life, years B -150,000 -1,025,000 -70,000 -5,000 40,000 5 200,000