Question: Machine will cost $200,000 to purchase and install is expected to last for 12 years, with a salvage value of $40,000 at that time. The

Machine will cost $200,000 to purchase and install is expected to last for 12 years, with a salvage value of $40,000 at that time. The O&M annual expenses are expected to be $11,000. This investment is expected to make an annual revenue of $40,000. If MARR=12%, is it justified to purchase the machine. Base your decision on IRR. Does your decision change if itI was based on PW computations?

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To evaluate the purchase decision of the machine we will calculate both the Internal Rate of Return IRR and the Present Worth PW Lets go through the c... View full answer

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