Question: 2 A mine has a choice between two machines to mine a particular ore. The basic cost data is presented in the table below. Machine

2 A mine has a choice between two machines to mine

2 A mine has a choice between two machines to mine a particular ore. The basic cost data is presented in the table below. Machine A Machine B Capital Cost 30,000 46,000 Salvage Value 2,000 0 Fixed annual operating 4,800 5,000 costs Variable cost per unit 5 2 produced Life (years) 10 6 If the cost of capital is 13.6%, Under what different conditions would you justify the purchase of either machine. (15)

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