Question: Y field Honey is contemplating a new packing machine, to be used for a relatively short period until its new factory is built with computerised

Y field Honey is contemplating a new packing machine, to be used for a relatively short period until its new factory is built with computerised equipment installed. Two machines are being investigated?

The chief accountant argues that ARR is the best method of investment appraisal. On the basis of ARR, which machine would you recommend?

Machine Cost (S) Cost savings Year1 Cost savings Year2 Cost savingsY Salvage valueend Year 3 50 000 10 000 12000 15 000 23 000 80 000 15 000 20 000 25000 35 000 Year 3

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