38. CLC Publishing is considering the purchase of an offset printing machine. A study of three available alternatives shows the following estimates: Determine the best printing machine using ROR analysis for the data given.   A B C Acquisition Cost P700 000.00 P850 000.00 P1 000 000.00 Shipping Cost 5% 5% 8% Net Annual Benefit P155 000.00 P145 000.00 P170 000.00 Useful Life 8 years 16 years 16 years Salvage Value P35 000.00 P70 000.00 P80 000.00

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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38. CLC Publishing is considering the purchase of an offset printing machine. A study of three available alternatives shows the following estimates:

Determine the best printing machine using ROR analysis for the data given.

 

A

B

C

Acquisition Cost

P700 000.00

P850 000.00

P1 000 000.00

Shipping Cost

5%

5%

8%

Net Annual Benefit

P155 000.00

P145 000.00

P170 000.00

Useful Life

8 years

16 years

16 years

Salvage Value

P35 000.00

P70 000.00

P80 000.00

(Ans. Select machine B; iB-A= 15.34%; iC-B=10.9%) 

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