Suppose Mulungushi University is undertaking an investment appraisal for a new photo copy machine. It estimates...

 

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Suppose Mulungushi University is undertaking an investment appraisal for a new photo copy machine. It estimates the relevant decision data of the alternatives to be as in the table: Machine A Machine B Initial outlay (S) Maintenance costs per year ($) Cost per copy (5) Amount of copies per year Salvage value (5) Economic life (years) Interest rate 10,000 2,000 0.05 100,000 500 5 7.5% 20,000 500 0.03 80,000 1,000 6 7.5% Evaluate the purchase of the copy machine using the cost comparison method if the required production volume is 80,000. Suppose Mulungushi University is undertaking an investment appraisal for a new photo copy machine. It estimates the relevant decision data of the alternatives to be as in the table: Machine A Machine B Initial outlay (S) Maintenance costs per year ($) Cost per copy (5) Amount of copies per year Salvage value (5) Economic life (years) Interest rate 10,000 2,000 0.05 100,000 500 5 7.5% 20,000 500 0.03 80,000 1,000 6 7.5% Evaluate the purchase of the copy machine using the cost comparison method if the required production volume is 80,000.

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The cost comparison method is used to compare the total cost of ownership ... View the full answer