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

10 comma 000

24 comma 000

Labor per year

2 comma 400

4 comma 400

Maintenance per year

4 comma 600

800

Salvage value

1 comma 600

7 comma 500


He is told to assume that:

1. The life of each machine is 3 years.

2. The company thinks it knows how to make 8% on investments no more risky than this one.

3. Labor and maintenance are paid at the end of the year.

Part 2

The NPV for Machine Aequals$


enter your response here (round your response to the nearest whole number and include a minus sign if necessary)

 

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