Question: Dave Metal is examining two options Machine A and Machine B - for a core-cutting machine. Machine A Initial Cost $ 250,000 Savings $28,000/year Maintenance
Dave Metal is examining two options Machine A and Machine B - for a core-cutting machine. Machine A Initial Cost $ 250,000 Savings $28,000/year Maintenance Cost $10,000/year + $0.05/unit Labor $0.25/widget Life 10 years Salvage Value $22,500. Machine B Initial Cost $ 180,000 Savings $22,000/year Maintenance Cost $20,000 /year Labor $0.50/widget Life 5 years Salvage Value $ 17,000. MARR is 12 percent and the companys sale projection is 30,000 widgets/year. Should either, both or neither machine be purchased? Use both present worth and annual worth comparisons.
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