An existing machine in a factory has an annual maintenance cost of 40,000 pesos. A new and more efficient machine will require an investment of 90,000 pesos and is estimated to have a salvage value of 30,000 pesos at the end of 8 years. Its annual expenses for maintenance total to 22,000 pesos. If the company expects to earn 12% on its investment, will it be worthwhile to purchase the new machine using the a) present worth method?

An existing machine in a factory has an annual maintenance cost of 40,000 pesos. A new and more efficient machine will require an investment of 90,000 pesos and is estimated to have a salvage value of 30,000 pesos at the end of 8 years. Its annual expenses for maintenance total to 22,000 pesos. If the company expects to earn 12% on its investment, will it be worthwhile to purchase the new machine using the a) present worth method?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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