Question: Consider Buying 2 different machines, using i = 8% Machine A Machine B Purchase Cost $5,000 $10,000 Annual Operating Cost $500 $200 Useful Life 5yr.

Consider Buying 2 different machines, using i = 8%

Machine A Machine B

Purchase Cost $5,000 $10,000

Annual Operating Cost $500 $200

Useful Life 5yr. 15yr.

Savage Value $600 $1000

Using Equivalent Annual Worth, since lifecycles are different:

Machine A = 5000(_____________)+ _______-600(___________)

= 5000 (_________) + ______ - 600(_______) = ______

Machine B = 10000 (__________) + ____ - 1000 (__________)

= 10000 (______) + _____ - 1000 (_______) = ________

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