A manufacturing company is attempting to determine the best-sized milling machine for their production shop. Five alternative sizes are available, as given in the following table. The company has a budget of $50000, and MARR = 15%. Which size machine should they purchase? Assume that the lifetime is n = 100 years and that the ultimate salvage value is zero for each machine. Machine I: Annual Revenue $1000, Initial Cost $10000 Machine II: Annual Revenue $5000, Initial Cost $20000 Machine III: Annual Revenue $7200, Initial Cost $40000 Machine IV: Annual Revenue $9000, Initial Cost $44000 Machine V: Annual Revenue $10000, Initial Cost $60000 A) v II II D) I IV
A manufacturing company is attempting to determine the best-sized milling machine for their production shop. Five alternative sizes are available, as given in the following table. The company has a budget of $50000, and MARR = 15%. Which size machine should they purchase? Assume that the lifetime is n = 100 years and that the ultimate salvage value is zero for each machine. Machine I: Annual Revenue $1000, Initial Cost $10000 Machine II: Annual Revenue $5000, Initial Cost $20000 Machine III: Annual Revenue $7200, Initial Cost $40000 Machine IV: Annual Revenue $9000, Initial Cost $44000 Machine V: Annual Revenue $10000, Initial Cost $60000 A) v II II D) I IV
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
Section: Chapter Questions
Problem 1PS
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ULTIMATE SALVAGE VALUE
![A manufacturing company is attempting to determine the best-sized milling machine for their production shop. Five alternative
sizes are available, as given in the following table. The company has a budget of $50000, and MARR = 15%. Which size machine
should they purchase? Assume that the lifetime is n = 100 years and that the ultimate salvage value is zero for each machine.
Machine I: Annual Revenue $1000, Initial Cost $10000
Machine Il: Annual Revenue $5000, Initial Cost $20000
Machine IlI: Annual Revenue $7200, Initial Cost $40000
Machine IV: Annual Revenue $9000, Initial Cost $44000
Machine V: Annual Revenue $10000, Initial Cost $60000
А
V
B
II
II
D
IV](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc55b9342-42c2-47c3-8c83-a4032a4edee2%2F28d8acb7-1ed0-4f62-9c88-1b63cbae9e00%2Fo4k1g6_processed.png&w=3840&q=75)
Transcribed Image Text:A manufacturing company is attempting to determine the best-sized milling machine for their production shop. Five alternative
sizes are available, as given in the following table. The company has a budget of $50000, and MARR = 15%. Which size machine
should they purchase? Assume that the lifetime is n = 100 years and that the ultimate salvage value is zero for each machine.
Machine I: Annual Revenue $1000, Initial Cost $10000
Machine Il: Annual Revenue $5000, Initial Cost $20000
Machine IlI: Annual Revenue $7200, Initial Cost $40000
Machine IV: Annual Revenue $9000, Initial Cost $44000
Machine V: Annual Revenue $10000, Initial Cost $60000
А
V
B
II
II
D
IV
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