The machines shown below are under consideration for an improvement to an automated candy bar wrapping process.

	Machine C	Machine D
First cost, $	40,000	75,000
Annual cost, $/year	15,000	10,000
Salvage value, $	12,000	25,000
Life, years	3	6

(Source: Blank and Tarquin)

Question 1 (10 points)

Based on the data provided and using an interest rate of 5% per year, the correct equation to calculate the Capital Recovery CR of Machine C is:

1. CR_C = 40,000(P/A, 5%, 3) + 12,000(F/A, 5%, 3)
2. CR_C = 40,000(A/P, 5%, 3) + 12,000(A/F, 5%, 3) 15,000(A/P, 5%,3)
3. CR_C = 40,000(A/P, 5%, 3) + 12,000(A/F, 5%, 3) 15,000
4. CR_C = 40,000(A/P, 5%, 3) + 12,000(A/F, 5%, 3)

Question 2 (10 points)

Based on the data provided and using an interest rate of 5% per year, the Capital Recovery CR of Machine C is closest to:

(All the alternatives presented below were calculated using compound interest factor tables including all decimal places)

1. CR_C = $14,688
2. CR_C = $18,494
3. CR_C = $6,117
4. CR_C = $10,882

Question 3 (10 points)

Based on the data provided and using an interest rate of 5% per year, the correct equation to calculate the Annual Worth AW of Machine C is:

1. AW_C= 40,000(P/A, 5%, 3) + 12,000(F/A, 5%, 3) 15,000
2. AW_C = 40,000(A/P, 5%, 3) + 12,000(A/F, 5%, 3) 15,000(A/P, 5%, 3)
3. AW_C = 40,000(A/P, 5%, 3) + 12,000(A/F, 5%, 3) 15,000
4. AW_C = 40,000(A/P, 5%, 3) + 25,000(A/F, 5%, 3) 10,000

Question 4 (10 points)

Based on the data provided and using an interest rate of 5% per year, the Annual Worth AW of Machine C is closest to:

(All the alternatives presented below were calculated using compound interest factor tables including all decimal places)

1. AW_C = $25,882
2. AW_C = $86,098
3. AW_C = $21,117
4. AW_C = $16,390