A company is considering two machines. Machine 1 has a first cost of $42,000, AOC of $19,000, and Salvage of $9,000 after 6 years. Machine 2 will cost $2,000 with an AOc of $15,000 and Salvage of $9,000 after 6 years. Please write formula, use compound interest table for extracting factors, show your solution step by step. Which machine should the company select at an interest rate of 10% per year? a) Draw cash flow diagram b) Apply AW analysis c) Apply PW analysis
A company is considering two machines. Machine 1 has a first cost of $42,000, AOC of $19,000, and Salvage of $9,000 after 6 years. Machine 2 will cost $2,000 with an AOc of $15,000 and Salvage of $9,000 after 6 years. Please write formula, use compound interest table for extracting factors, show your solution step by step. Which machine should the company select at an interest rate of 10% per year? a) Draw cash flow diagram b) Apply AW analysis c) Apply PW analysis
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![A company is considering two machines. Machine 1 has a first cost of $42,000, AOC of
$19,000, and Salvage of $9,000 after 6 years. Machine 2 will cost $2,000 with an AOC
of $15,000 and Salvage of $9,000 after 6 years.
Please write formula, use compound interest table for extracting factors, show your
solution step by step.
Which machine should the company select at an interest rate of 10% per year?
a)
Draw cash flow diagram
b)
Apply AW analysis
c) Apply PW analysis](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F89104c26-171d-4fdc-bd89-082564858d71%2Fa2c8c8cc-e68b-47fe-966b-564c667b85dc%2Fnvd64kt_processed.png&w=3840&q=75)
Transcribed Image Text:A company is considering two machines. Machine 1 has a first cost of $42,000, AOC of
$19,000, and Salvage of $9,000 after 6 years. Machine 2 will cost $2,000 with an AOC
of $15,000 and Salvage of $9,000 after 6 years.
Please write formula, use compound interest table for extracting factors, show your
solution step by step.
Which machine should the company select at an interest rate of 10% per year?
a)
Draw cash flow diagram
b)
Apply AW analysis
c) Apply PW analysis
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