Complete each problem in excel. Submit your excel worksheet in EXCEL format so I can see how you solved the problems. Please MARK or Outline your answers so I can tell where they are.

You are trying to decide between two different machines on a project

There are two machines under consideration. They will provide the same function, but there are difference in cost, benefits, life and other details.

Costs, machine prices AND salvage all go up at the rate of inflation.

Costs and benefits are shown for year 1.

Benefits go up by the % given and are different for each machine.

Salvage costs are given for an 14 yr old machne A or a 7 yr old machine B TODAY. Adjust with inflation.

Help your employer to determine which machine is the best choice.

MARR 14.10%

Inflation 2.880%

Machine A

Initial Cost $12,500

Salvage $6,100 14 yr old machine today

Life 14 Years

Benefits $7,100 Per year

Benefit inc 3.80%

Costs $3,200 Per year

Machine B

Initial Cost $9,300

Salvage $3,200 7 yr old machine today

Life 7 Years

Benefits $6,800 Per year

Benefits inc 4.40%

Costs $2,900 Per year

5a. Create the net cash flow chart for both machines.

5b. Deterine the NPW for both machines.

5c. Determine the EUAW for both machines.

5d. Determine the NFW for both machines.

5e. Determine the IRR for both machines

5f. Determine the DELTA IRR .

5g. Which machine will you select? Show the decision table for these alternatives.

5h. Graph the NPW versus MARR chart for both machines (both curves on the same graph)