Problem is in the image A company is trying to decide between two machine that arenecessary in its manufacturing facility. If management has a minimum attractive rate ofreturn (MARR) of 15%, which of the following machine should be chosen? Use annualcash flow analysis methodMachine AMachine BFirst cost$45,000$31,000$3,000$24,000$35,000$5,000Annual operating costsOverhaul in Year 4Salvage valueUseful life8 yearsб уears

When there is a choice between selection of two machines one is to be selected from two. It is called mutually exclusive project. Mutually exclusive project means selecting one from two. So from the question we have to select from Machine A or Machine B which is feasible to our company. but not both the machines. From both the machines they are given annual cost with discount factor of 15% , so the machines which is given least discounting the cash out flow will be selected. Machine A Machine B Year DF @15% DCF DF @15% DCF 1 45000 1 45000 24000 1 24000 1 31000 0.8695 26955 35000 0.8695 30432.5 2 31000 0.7561 23439 35000 0.7561 26463.5 3 31000 0.6575 20383 35000 0.6575 23012.5 4 34000(31000+3000) 0.5717 19438 40000(35000+5000) 0.5717 22868 5 31000 0.4971 15410 35000 0.4971 17398.5 6 31000 0.4323 13401 35000 0.4323 15130.5 7 31000 0.3759 11653 8 31000 0.3269 10134 185812 159305.5 For 6 years cash flow for Machine A is 185812-11653-10134=164025 Machine B is selected since it has least cash outflow comparative to machine A Machine