Machine A Machine BType of Equipment General purposes Special PurposeInstalled Cost $8000 $13000Salvage Value 800 3000Annual Labor Cost 6000 3600Estimated Life (yrs) 10 5In adding a new product line a firm needs a new piece of machinery. An investigator of suitable equipment for the production process has narrowed the choice to the two machines listed.Assume that at the end of five years a comparable replacement for Machine B will be available. Using present-value analysis with a 10 percent interest rate which machine would you choose?

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