Your have been asked to evaluate two machines. The life cycle of each machine is 4...

 

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Your have been asked to evaluate two machines. The life cycle of each machine is 4 years and the interest rate is 3%. Assume all costs occur at the end of each year. Salvage value is received at the end of the life cycle. One labour hour is expected to cost $12 in year 1 and 2. Cost of labour will increase by 25% in year 3 and 4 (from year 1 and 2). Category Original Cost Direct labour hours per year Electricity per year Maintenance labour hours per year Salvage Value Machine A $250,000 3,500 $43,500 180 $90,000 Machine B $380,000 1,800 $18,000 160 $100,000 Determine via the present value method which machine to purchase. Show all calculations you are using to reach a conclusion. Your have been asked to evaluate two machines. The life cycle of each machine is 4 years and the interest rate is 3%. Assume all costs occur at the end of each year. Salvage value is received at the end of the life cycle. One labour hour is expected to cost $12 in year 1 and 2. Cost of labour will increase by 25% in year 3 and 4 (from year 1 and 2). Category Original Cost Direct labour hours per year Electricity per year Maintenance labour hours per year Salvage Value Machine A $250,000 3,500 $43,500 180 $90,000 Machine B $380,000 1,800 $18,000 160 $100,000 Determine via the present value method which machine to purchase. Show all calculations you are using to reach a conclusion. Your have been asked to evaluate two machines. The life cycle of each machine is 4 years and the interest rate is 3%. Assume all costs occur at the end of each year. Salvage value is received at the end of the life cycle. One labour hour is expected to cost $12 in year 1 and 2. Cost of labour will increase by 25% in year 3 and 4 (from year 1 and 2). Category Original Cost Direct labour hours per year Electricity per year Maintenance labour hours per year Salvage Value Machine A $250,000 3,500 $43,500 180 $90,000 Machine B $380,000 1,800 $18,000 160 $100,000 Determine via the present value method which machine to purchase. Show all calculations you are using to reach a conclusion. Your have been asked to evaluate two machines. The life cycle of each machine is 4 years and the interest rate is 3%. Assume all costs occur at the end of each year. Salvage value is received at the end of the life cycle. One labour hour is expected to cost $12 in year 1 and 2. Cost of labour will increase by 25% in year 3 and 4 (from year 1 and 2). Category Original Cost Direct labour hours per year Electricity per year Maintenance labour hours per year Salvage Value Machine A $250,000 3,500 $43,500 180 $90,000 Machine B $380,000 1,800 $18,000 160 $100,000 Determine via the present value method which machine to purchase. Show all calculations you are using to reach a conclusion. Your have been asked to evaluate two machines. The life cycle of each machine is 4 years and the interest rate is 3%. Assume all costs occur at the end of each year. Salvage value is received at the end of the life cycle. One labour hour is expected to cost $12 in year 1 and 2. Cost of labour will increase by 25% in year 3 and 4 (from year 1 and 2). Category Original Cost Direct labour hours per year Electricity per year Maintenance labour hours per year Salvage Value Machine A $250,000 3,500 $43,500 180 $90,000 Machine B $380,000 1,800 $18,000 160 $100,000 Determine via the present value method which machine to purchase. Show all calculations you are using to reach a conclusion. Your have been asked to evaluate two machines. The life cycle of each machine is 4 years and the interest rate is 3%. Assume all costs occur at the end of each year. Salvage value is received at the end of the life cycle. One labour hour is expected to cost $12 in year 1 and 2. Cost of labour will increase by 25% in year 3 and 4 (from year 1 and 2). Category Original Cost Direct labour hours per year Electricity per year Maintenance labour hours per year Salvage Value Machine A $250,000 3,500 $43,500 180 $90,000 Machine B $380,000 1,800 $18,000 160 $100,000 Determine via the present value method which machine to purchase. Show all calculations you are using to reach a conclusion.

Answer rating: 100% (QA)

Answer To determine which machine to purchase using the present value method we need to calculate the net present value NPV for each machine NPV is calculated by discounting the future cash flows of e... View the full answer