A small manufacturing firm is considering the purchase of a new boring machine to modernize one...
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A small manufacturing firm is considering the purchase of a new boring machine to modernize one of its production lines. Two types of boring machine are available on the market. The lives of machine A and machine B are 8 years and 10 years, respectively. The machines have the following receipts and disbursements. Use a MARR (after-tax) of 15% and a marginal tax rate of 40% Item Machine A Machine B First cost Service life Salvage value Annual O&M costs ССА $6,500 8 years $8,000 10 years 1000 500 800 650 DB (30%) DB (30%) (a) Which machine would be most economical to purchase? (b) Determine the break-even annual O&M costs for machine A so that the present worth of machines A and B is the same. (c) Suppose that the required service life of the machine is only 5 years. The estimated salvages at the end of the required service period are estimated to be $2,500 for machine A and $3,000 for machine B, respectively. Which machine is more economical? A small manufacturing firm is considering the purchase of a new boring machine to modernize one of its production lines. Two types of boring machine are available on the market. The lives of machine A and machine B are 8 years and 10 years, respectively. The machines have the following receipts and disbursements. Use a MARR (after-tax) of 15% and a marginal tax rate of 40% Item Machine A Machine B First cost Service life Salvage value Annual O&M costs ССА $6,500 8 years $8,000 10 years 1000 500 800 650 DB (30%) DB (30%) (a) Which machine would be most economical to purchase? (b) Determine the break-even annual O&M costs for machine A so that the present worth of machines A and B is the same. (c) Suppose that the required service life of the machine is only 5 years. The estimated salvages at the end of the required service period are estimated to be $2,500 for machine A and $3,000 for machine B, respectively. Which machine is more economical?
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Answer rating: 100% (QA)
a Since the projects have differeny service lives we will use Annual worth basis for comparison and not PV Machine A Depreciation schedule Year Opening WDV Depreciation 30 Closing WDV 1 650000 97500 5... View the full answer
Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Posted Date:
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