Question: . . . . PARC Co., has asked you to recommend a new nutcracker machine. After months of hard re-search, you have collected the following
. . . . PARC Co., has asked you to recommend a new nutcracker machine. After months of hard re-search, you have collected the following data: Data KRAX SPLIT-NUT Life, Years 6 9 First Cost (FC) $ 202,000.00 $285,000.00 Benefit, Yearly (AB) 73,000.00 88,000.00 Gradient (ABG) 1,200.00 1,300.00 M&O Gradient (M&OG) 600.00 1,100.00 M&O Cost (M&O) 18,000.00 34,000.00 Salvage Value 42,000.00 48,000.00 Discussions with the accounting department reveal that a loan must be secured to purchase any machine. The loan data is as follows: Data KRAX SPLIT-NUT Down Payment (% of FC) 30% 30% Loan Period, Years 6 9 Loan Payment $34,392.11 $37,441.93 The loan payments will be made annually. The lender will charge 12% interest with annual com-pounding. Calculate the Net Present Worth of each machine and recommend which machine to purchase. Use a MARR of 15%. . . . . . . . PARC Co., has asked you to recommend a new nutcracker machine. After months of hard re-search, you have collected the following data: Data KRAX SPLIT-NUT Life, Years 6 9 First Cost (FC) $ 202,000.00 $285,000.00 Benefit, Yearly (AB) 73,000.00 88,000.00 Gradient (ABG) 1,200.00 1,300.00 M&O Gradient (M&OG) 600.00 1,100.00 M&O Cost (M&O) 18,000.00 34,000.00 Salvage Value 42,000.00 48,000.00 Discussions with the accounting department reveal that a loan must be secured to purchase any machine. The loan data is as follows: Data KRAX SPLIT-NUT Down Payment (% of FC) 30% 30% Loan Period, Years 6 9 Loan Payment $34,392.11 $37,441.93 The loan payments will be made annually. The lender will charge 12% interest with annual com-pounding. Calculate the Net Present Worth of each machine and recommend which machine to purchase. Use a MARR of 15%
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