2. A certain companyis considering twotypes of machine for its operation. The dataare as follows:Machine AFirst costP150,000Life4 yrsSalvage valueP15,000Annual operating costP48,000Annual taxesP4,200Annual repairsP7,200Machine BFirst costP200,000Life8 yrsP10,000Salvage valueAnnual operating costP32,000Annual taxesP7,200Annual repairsP4,200If money is worth 12% compoundedannually, compute the difference of thepresent worth of the two machines.

Present Worth refers to discounting of the future cash flow to the present at provided fixed rate .…

Answered: 2. A certain company is considering two…

2. A certain company is considering two types of machine for its operation. The data are as follows: Machine A P150,000 First cost

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

2. A certain company
is considering two
types of machine for its operation. The data
are as follows:
Machine A
First cost
P150,000
Life
4 yrs
Salvage value
P15,000
Annual operating cost
P48,000
Annual taxes
P4,200
Annual repairs
P7,200
Machine B
First cost
P200,000
Life
8 yrs
P10,000
Salvage value
Annual operating cost
P32,000
Annual taxes
P7,200
Annual repairs
P4,200
If money is worth 12% compounded
annually, compute the difference of the
present worth of the two machines.

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