A company is planning to invest $28000 on a lathe machine at year 0. The maintenance cost
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A company is planning to invest $28000 on a lathe machine at year 0. The maintenance cost every year is $3000. The net cash flows generated from year 1 to year 6 is: $3000, and $7000 equally in the following 5 years. The machine has a 6-year service life and can be resold at the price at $6000 then. The MARR is 6%.
(a) Draw the cash flow diagram.
b) Determine the annual owning cost for the machine.
c) Determine the equivalent present and annual revenue of the machine.
d) Determine if this is a good investment using AE analysis.
Related Book For
Contemporary Financial Management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
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