Using before tax cash flow analysis, prepare an exhibit that shows the range of annual volume over which each machine is the least costly option given the data below Use an interest rate of 16 0 All options are expected to be in use for a long period of time Option 1 2 3 4 Purchase 120,000 105,000 95,000 65,000 Salvage 14,000 5,000 2,000 1,000 Life (yrs) 12 10 8 5 Annual Maintenance Cost 25,000 24,500 26,000 20,000 Unit Costs 22 50 25 50 26 00 32 50 a What is the total fixed annual cost of option 2 b What is the maximum volume that option 4 is the lowest cost

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Question: Using before tax cash flow analysis, prepare an exhibit that shows the range of annual volume over which each machine is the least costly option

Using before tax cash flow analysis, prepare an exhibit that shows the range of annual volume over which each machine is the least costly option given the data below. Use an interest rate of 16.0%. All options are expected to be in use for a long period of time.

Option	1	2	3	4
Purchase	120,000	105,000	95,000	65,000
Salvage	14,000	5,000	2,000	1,000
Life (yrs)	12	10	8	5
Annual Maintenance Cost	25,000	24,500	26,000	20,000
Unit Costs	22.50	25.50	26.00	32.50

a. What is the total fixed annual cost of option 2?

b. What is the maximum volume that option 4 is the lowest cost?

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