Problem 3. (15 Pts) Two machines, X and Y, are being considered by a company in...

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Problem 3. (15 Pts) Two machines, X and Y, are being considered by a company in Rhode Island. They use a (AAA + 3)% percent/year rate of return and a 24-year life for decisions of this type. The relevant characteristics for each design are shown below. Design A $35000 Design B $55000 Initial Cost Estimated Life Salvage Value Annual Maintenance cost 12 years None $550 24 years $3000 $350 a) What is the future worth of each design? b) What is the decision rule for determining the preferred design based on future worth ranking? Which structure should be recommended? c) Plot a graph for both alternatives future worth changes with the ARR (annual rate of return) if expected annual rate of return varies from (AAA+ 3)% to (AAA+6)%. What do you infer? Problem 3. (15 Pts) Two machines, X and Y, are being considered by a company in Rhode Island. They use a (AAA + 3)% percent/year rate of return and a 24-year life for decisions of this type. The relevant characteristics for each design are shown below. Design A $35000 Design B $55000 Initial Cost Estimated Life Salvage Value Annual Maintenance cost 12 years None $550 24 years $3000 $350 a) What is the future worth of each design? b) What is the decision rule for determining the preferred design based on future worth ranking? Which structure should be recommended? c) Plot a graph for both alternatives future worth changes with the ARR (annual rate of return) if expected annual rate of return varies from (AAA+ 3)% to (AAA+6)%. What do you infer?