Question: 7. Compare the two scenarios for acquiring a machine for a project for 25 years expected operations, at a company with an internal rate of
7. Compare the two scenarios for acquiring a machine for a project for 25 years expected operations, at a company with an internal rate of return of 1=18%. Which scenario is better? Please round to the nearest $. Scenario 1. Buy an initial small machine at $18,000, it cost $2,400/ year to run for the first 15 years, buy a second larger machine at $25,000 and run it for 10 years at a cost of $5,000 /year. There is no salvage value at the end of service for either machine. Scenario 2. Buy a large machine for $40,000 and run it for 25 years at a cost of $1,000/ year. At the end of the 25 years, the machine is assumed to have a salvage value of $8,000
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