The data for used and new machines are shown below (i = 10%) Used Machine New Machine
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The data for used and new machines are shown below (i = 10%)
| Used Machine | New Machine | |
| Initial Cost, $ | -15,000 | - 40,000 |
| Annual Cost, $/year | - 8000 | - 2000 |
| Salvage Value, $ | 5000 | 10,000 |
| Life, years | 2 | 4 |
- Draw the cash flow diagram for both machines.
- Which machine would be selected based on their present worth?
- Determine the capitalized costs for both machines.
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