Question: Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table: Machine
Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table:
| Machine A | Machine B | |||
| Original Cost | $ 12 comma 000$12,000 | $ 20 comma 000$20,000 | ||
| Labor per year | $ 2 comma 400$2,400 | $ 4 comma 400$4,400 | ||
| Maintenance per year | $ 4 comma 300$4,300 | $ 800$800 | ||
| Salvage value | $ 1 comma 600$1,600 | $ 7 comma 000$7,000 | ||
He is told to assume that:
1. The life of each machine is
33
years.
2. The company thinks it knows how to make
88%
on investments no more risky than this one.
3. Labor and maintenance are paid at the end of the year.
The NPV for Machine
A=$
(round your response to the nearest whole number and include a minus sign if necessary).
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