Question: Our company must replace an obsolete machine press. We have two bids, summarized below, to consider. Machine A is depreciated using MACRS. Machine B is

Our company must replace an obsolete machine press. We have two bids, summarized below, to consider. Machine A is depreciated using MACRS. Machine B is depreciated using SOYD. Machine A will be sold for $5000 at the end of its useful life and machine B will be sold for $10,000 at the end of its useful life. Our company uses an after-tax MARR of 12% and it falls in the 38% total income tax bracket. Our company is required to purchase one of these two machines, do nothing is not an option.

	Machine A	Machine B
Useful Life (years)	5	5
Initital Cost	$ 75,00	$ 76,000
Annual O & M	$ 62,000	$ 70,000
Annual Revenue	$ 82,000	$ 85,000
Salvage Value	0	$ 5,000

Based on the After Tax Cash Flow and using a Net Present Worth analysis and considering taxes which machine should our company purchase?

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