"A company is considering two types of machines for a manufacturing process. Machine A has an immediate cost of $69,000, and its salvage value at the end of 6 years of service life is $18,000. The operating costs of this machine are estimated to be $6800 per year. Extra income taxes are estimated at $1700 per year. Machine B has an immediate cost of $33,000, and its salvage value at the end of 6 years' service is neglible. The annual operating costs for Machine B will be $20,000. There are no extra income taxes with Machine B. Ignore the effects of depreciation for both machines and ignore any gains taxes from selling the machines. Compare these two mutually exclusive alternatives by the present-worth method at i = 15.4%. Enter the ""net present cost"" as a positive number for the machine that you would select. You must select one of the two machines."
"A company is considering two types of machines for a manufacturing process. Machine A has an immediate cost of $69,000, and its salvage value at the end of 6 years of service life is $18,000. The operating costs of this machine are estimated to be $6800 per year. Extra income taxes are estimated at $1700 per year. Machine B has an immediate cost of $33,000, and its salvage value at the end of 6 years' service is neglible. The annual operating costs for Machine B will be $20,000. There are no extra income taxes with Machine B. Ignore the effects of depreciation for both machines and ignore any gains taxes from selling the machines. Compare these two mutually exclusive alternatives by the present-worth method at i = 15.4%. Enter the ""net present cost"" as a positive number for the machine that you would select. You must select one of the two machines."
