Question: Consider Buying 2 different machines, using i = 8% Machine A Machine B Purchase Cost $10,000 $20,000 Annual Operating Cost $500 $400 Useful Life 4

Consider Buying 2 different machines, using i = 8% 

                                                 Machine A           Machine B 

Purchase Cost                            $10,000            $20,000 

Annual Operating Cost             $500                 $400 

Useful Life                                   4 yr.                  12 yr. 

Savage Value                              $0                     $5000 

Using Present Cost, buy 3 A machines to equate 12 year life.

Machine A    = 10,000 [_______________________] +  500 (__________) = 10000(_____________) + 500(_____) = $_______

Machine B = 20000 + 400 (__________) - 5000 (___________) = 20000 + 400 (_________) - 5000 (_______) = $______

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