Data for two machines P and Q are as shown below. At what MARR will both machines be equally attractive for installation? Machine Q Machine Initial cost $125.000 $275.000

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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Data for two machines P and Q are as shown below. At what
MARR will both machines be equally attractive for installation?
Machine
Machine
Initial cost
$125,000 $275,000
Life in years
4
Inflation per year (for all costs)
2.00%
Benefit increase per year
4.50%
MARR per year compounded yearly
12.00%
Project life in years
12
First
year
estimated costs
$33,750
$63,250
First year estimated benefits
$65,000
$112,750
Salvage value of machine (% of
initial cost)
12.00%
8.00%
Transcribed Image Text:Data for two machines P and Q are as shown below. At what MARR will both machines be equally attractive for installation? Machine Machine Initial cost $125,000 $275,000 Life in years 4 Inflation per year (for all costs) 2.00% Benefit increase per year 4.50% MARR per year compounded yearly 12.00% Project life in years 12 First year estimated costs $33,750 $63,250 First year estimated benefits $65,000 $112,750 Salvage value of machine (% of initial cost) 12.00% 8.00%
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