A company is considering two machines: A and B. Ae has an initial cost of $85,000, a salvage value of $10,000, and an annual maintenance costs of $8,500. A has the capacity to manufacture 15 catapults per hour and has a useful life of 8 years. B has an initial cost of $55,000, salvage value of $6,000, and an annual maintenance cost of $5,500. B has the capacity to manufacture 12 catapults per hour, and has a useful life of 4 years. Both machines require one operator paid $15 per hour during production.

Choose the correct setup for project A:

NPW(SG) = -85,000 * (P/A, 12%, 8) + 10,000 * (P/F, 12%, 8) – 8,500 – [($15 / 15) * X]

EUAW(SG) = -85,000 * (A/P, 12%, 8) + 10,000 * (A/F, 12%, 8) – 8,500 – ($15 / 15) * X

NPW(SG) = -85,000 * (A/P, 12%, 8) + 10,000 * (A/F, 12%, 8) – 8,500 – ($15 / 15) * X

EUAW(SG) = -85,000 * (A/P, 12%, 16) + 10,000 * (A/F, 12%, 16) – 8,500 – ($15 / 15) * X

Choose the correct setup for B

EUAW(R) = -55,000*(A/P, 12% , 16) + 6,000 * (A/F, 12%, 16) – 5,500 – [($15 / 12) * X]

EUAW(R) = -55,000*(A/P, 12% ,4) + 6,000 * (A/F, 12%, 4) – 5,500 – [($15 / 12) * X]

NPW(R) = -55,000*(P/A, 12% ,4) + 6,000 * (P/F, 12%, 4) – 5,500 – [($15 / 12) * X]

NPW(R) = -55,000*(A/P, 12% ,4) + 6,000 * (A/F, 12%, 4) – 5,500 – [($15 / 12) * X]

And determine the annual production quantity when the two machines are equally attractive and have a MARR of 12%.

Thank you! I will rate and the explanation doesn't have to be that detailed, I'm just double checking work.

Answer rating: 100% (QA)

The two machines are equally attractive when they have the same net present value NPV The net presen... View the full answer