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2. An industrial firm uses an economic analysis to determine which of these two machines to purchase. Each machine can perform the same function. Assume the rate of return is 10%. Machine A Machine B Initial Cost Php 250,000 Php 350,000 Salvage Value Php 40,000 Php 50,000 Annual Maintenance Cost Php 12,000 Php 15,000 Estimated Life 5 years 5 years Php 50,000 Php 40,000 Annual Revenue Which machine is better using the following methods: a) Rate of Return on Additional Investment; b) Present Worth Method; c) Equivalent Uniform Annual Cost; d) Capitalized Cost

2. An industrial firm uses an economic analysis to determine which of these two machines to purchase. Each machine can perform the same function. Assume the rate of return is 10%. Machine A Machine B Initial Cost Php 250,000 Php 350,000 Salvage Value Php 40,000 Php 50,000 Annual Maintenance Cost Php 12,000 Php 15,000 Estimated Life 5 years 5 years Php 50,000 Php 40,000 Annual Revenue Which machine is better using the following methods: a) Rate of Return on Additional Investment; b) Present Worth Method; c) Equivalent Uniform Annual Cost; d) Capitalized Cost

Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter19: The Basic Tools Of Finance
Section: Chapter Questions
Problem 2CQQ
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2. An industrial firm uses an economic analysis to determine which of these two machines to purchase. Each machine can perform the same function. Assume the rate of return is 10%. Machine A Machine B Initial Cost Php 250,000 Php 350,000 Salvage Value Php 40,000 Php 50,000 Annual Maintenance Cost Php 12,000 Php 15,000 Estimated Life 5 years 5 years Php 50,000 Php 40,000 Annual Revenue Which machine is better using the following methods: a) Rate of Return on Additional Investment; b) Present Worth Method; c) Equivalent Uniform Annual Cost; d) Capitalized Cost
Transcribed Image Text:2. An industrial firm uses an economic analysis to determine which of these two machines to purchase. Each machine can perform the same function. Assume the rate of return is 10%. Machine A Machine B Initial Cost Php 250,000 Php 350,000 Salvage Value Php 40,000 Php 50,000 Annual Maintenance Cost Php 12,000 Php 15,000 Estimated Life 5 years 5 years Php 50,000 Php 40,000 Annual Revenue Which machine is better using the following methods: a) Rate of Return on Additional Investment; b) Present Worth Method; c) Equivalent Uniform Annual Cost; d) Capitalized Cost
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