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439 You are selecting equipment for a project. 440 There are two machines under consideration. They will provide the same function, but there are difference in cost, benefits, life and other details. 441 Costs, machine prices AND salvage all go up at the rate of inflation. 442 Costs and benefits are shown for year 1. 443 Benefits go up by the % given. 444 Salvage costs are given for an 10 yr old machne A or a 5 yr old machine B TODAY. Adjust with inflation. 445 Help your employer to determine which machine is the best choice. 446 447 MARR 448 Inflation 13.00% 1.980% 449 Machine A Machine B 450 Initial Cost $13,400 Initial Cost $ 5,750 451 Salvage $ 6,100 10 Yr machine today Salvage $ 2,051 6 yr old machine today 452 Life 10 Years Life 5 Years 453 Benefits $ 7,500 Per year Benefits $ 6,450 Per year 454 Benefit inc 3.10% -455 Costs $ 2,805 Per year Benefits inc Costs 2.78% $ 2,750 Per year 456 457 458 Create the net cash flow chart for both machines. 459 Deterine the NPW for both machines. 460 Determine the EUAW for both machines. 461 Determine the NFW for both machines. 462 Determine the IRR for both machines 463 Detemine the DELTA IRR. 464 Which machine will you select? Why? Show me the decision table. 465 Graph the NPW versus MARR chart for both machines (both curves on the same graph)

439 You are selecting equipment for a project. 440 There are two machines under consideration. They will provide the same function, but there are difference in cost, benefits, life and other details. 441 Costs, machine prices AND salvage all go up at the rate of inflation. 442 Costs and benefits are shown for year 1. 443 Benefits go up by the % given. 444 Salvage costs are given for an 10 yr old machne A or a 5 yr old machine B TODAY. Adjust with inflation. 445 Help your employer to determine which machine is the best choice. 446 447 MARR 448 Inflation 13.00% 1.980% 449 Machine A Machine B 450 Initial Cost $13,400 Initial Cost $ 5,750 451 Salvage $ 6,100 10 Yr machine today Salvage $ 2,051 6 yr old machine today 452 Life 10 Years Life 5 Years 453 Benefits $ 7,500 Per year Benefits $ 6,450 Per year 454 Benefit inc 3.10% -455 Costs $ 2,805 Per year Benefits inc Costs 2.78% $ 2,750 Per year 456 457 458 Create the net cash flow chart for both machines. 459 Deterine the NPW for both machines. 460 Determine the EUAW for both machines. 461 Determine the NFW for both machines. 462 Determine the IRR for both machines 463 Detemine the DELTA IRR. 464 Which machine will you select? Why? Show me the decision table. 465 Graph the NPW versus MARR chart for both machines (both curves on the same graph)

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 7EB: An auto repair company needs a new machine that will check for defective sensors. The machine has an...
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439 You are selecting equipment for a project. 440 There are two machines under consideration. They will provide the same function, but there are difference in cost, benefits, life and other details. 441 Costs, machine prices AND salvage all go up at the rate of inflation. 442 Costs and benefits are shown for year 1. 443 Benefits go up by the % given. 444 Salvage costs are given for an 10 yr old machne A or a 5 yr old machine B TODAY. Adjust with inflation. 445 Help your employer to determine which machine is the best choice. 446 447 MARR 448 Inflation 13.00% 1.980% 449 Machine A Machine B 450 Initial Cost $13,400 Initial Cost $ 5,750 451 Salvage $ 6,100 10 Yr machine today Salvage $ 2,051 6 yr old machine today 452 Life 10 Years Life 5 Years 453 Benefits $ 7,500 Per year Benefits $ 6,450 Per year 454 Benefit inc 3.10% -455 Costs $ 2,805 Per year Benefits inc Costs 2.78% $ 2,750 Per year 456 457 458 Create the net cash flow chart for both machines. 459 Deterine the NPW for both machines. 460 Determine the EUAW for both machines. 461 Determine the NFW for both machines. 462 Determine the IRR for both machines 463 Detemine the DELTA IRR. 464 Which machine will you select? Why? Show me the decision table. 465 Graph the NPW versus MARR chart for both machines (both curves on the same graph)
Transcribed Image Text:439 You are selecting equipment for a project. 440 There are two machines under consideration. They will provide the same function, but there are difference in cost, benefits, life and other details. 441 Costs, machine prices AND salvage all go up at the rate of inflation. 442 Costs and benefits are shown for year 1. 443 Benefits go up by the % given. 444 Salvage costs are given for an 10 yr old machne A or a 5 yr old machine B TODAY. Adjust with inflation. 445 Help your employer to determine which machine is the best choice. 446 447 MARR 448 Inflation 13.00% 1.980% 449 Machine A Machine B 450 Initial Cost $13,400 Initial Cost $ 5,750 451 Salvage $ 6,100 10 Yr machine today Salvage $ 2,051 6 yr old machine today 452 Life 10 Years Life 5 Years 453 Benefits $ 7,500 Per year Benefits $ 6,450 Per year 454 Benefit inc 3.10% -455 Costs $ 2,805 Per year Benefits inc Costs 2.78% $ 2,750 Per year 456 457 458 Create the net cash flow chart for both machines. 459 Deterine the NPW for both machines. 460 Determine the EUAW for both machines. 461 Determine the NFW for both machines. 462 Determine the IRR for both machines 463 Detemine the DELTA IRR. 464 Which machine will you select? Why? Show me the decision table. 465 Graph the NPW versus MARR chart for both machines (both curves on the same graph)
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