A Company Is Considering Buying One Of The Following Two Machines. Machine A Machine B $3,900 $1,800 $5,550 $3,100 Initial cost Salvage value 10 years 13 years $ 275 (year 1 to 8) $425 (year 9 Useful life Annual 398 year 1 to 10 maintenance to 13) Interest rate 6% 6% 1. What is the equivalent uniform annual cost of Machine B? 2. What is the equivalent uniform annual cost of Machine A?

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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A Company Is Considering Buying One Of The Following Two Machines. Show the complete solution for each question.
A Company Is Considering Buying One Of The Following Two Machines.
Machine A
Machine B
$3,900
$1,800
$5,550
$3,100
Initial cost
Salvage
value
13 years
$ 275 (year 1
to 8)
Useful life
10 years
Annual
398 year 1 to 10
maintenance
$425 (year 9
to 13)
Interest rate
6%
6%
1. What is the equivalent uniform annual cost of Machine B?
2. What is the equivalent uniform annual cost of Machine A?
Transcribed Image Text:A Company Is Considering Buying One Of The Following Two Machines. Machine A Machine B $3,900 $1,800 $5,550 $3,100 Initial cost Salvage value 13 years $ 275 (year 1 to 8) Useful life 10 years Annual 398 year 1 to 10 maintenance $425 (year 9 to 13) Interest rate 6% 6% 1. What is the equivalent uniform annual cost of Machine B? 2. What is the equivalent uniform annual cost of Machine A?
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