Choose from the two machines which is more economical: Machine A Machine B First Cost P12,000 Р17,000 Salvage Value Annual Operation P2,000 3,000 2,400 Annual Maintenance 1,200 1,000 Taxes and Insurance 3% 3% Life, years 10 15 Money is worth at least 16%

Choose from the two machines which is more economical: Machine A Machine B First Cost P12,000 Р17,000 Salvage Value Annual Operation P2,000 3,000 2,400 Annual Maintenance 1,200 1,000 Taxes and Insurance 3% 3% Life, years 10 15 Money is worth at least 16%

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

SOLVE IT USING

A. Rate of Return on Additional Investment Method
B. Annual Cost Method

Choose from the two machines which is more economical:
Machine A
Machine B
First Cost
P12,000
Р17,000
Salvage Value
Annual Operation
P2,000
3,000
2,400
Annual Maintenance
1,200
1,000
Taxes and Insurance
3%
3%
Life, years
10
15
Money is worth at least 16%

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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