Required information

Problem 14.056

The two machines shown are being considered for a chip manufacturing operation. Assume the MARR is a real return of 11% per year and that the inflation rate is 4.3% per year.

Machine	A	B
First Cost, $	-155,000	-900,000
M&O, $ per year	70,000	5,000
Salvage Value, $	40,000	200,000
Life, years	5

Problem 14.056.a: Compare two alternatives based on their AW values without inflation consideration

Which machine should be selected on the basis of an annual worth analysis if the estimates are in constant-value dollars? What is the annual worth of the selected alternative?

Select machine (Click to select) B A

The annual worth of the alternative is $

Problem 14.056.b: Compare two alternatives based on their AW values with inflation consideration

Which machine should be selected on the basis of an annual worth analysis if the estimates are in future dollars? What is the annual worth of the selected alternative?

Select machine (Click to select) A B

The annual worth of the alternative is $