Machine A costs Q10,000.00, with a recovery value of Q4,000.00 at the end of 5 years and has annual expenses of operation of Q5,000.00 during the first three years and Q6,000.00 during the last 2. Machine B costs Q14,000.00, with a recovery value of Q3,000.00 at the end of 10 years. Its operating expenses amount to Q3,500.00 annually during the 5 years and Q4,500.00 during the last 5. The increases in operating expenses are the expected for maintenance, repair and loss of efficiency due to use. The minimum required rate of return is 15% a) Make the graph and determine the annual cost and make the respective comparison between the two machines. b) Select the most feasible machine. c) Determine the future worth in year 10 for both machines. d) Determine the quarterly value during the 10 years for both machines. e) As an Engineer you are asked to determine an action plan, define objectives, activities to overcome the best alternative and estimating a new NPV, which exceeds 15% the best option
Machine A costs Q10,000.00, with a recovery value of Q4,000.00 at the end of 5 years and has annual expenses of
operation of Q5,000.00 during the first three years and Q6,000.00 during the last 2. Machine B costs
Q14,000.00, with a recovery value of Q3,000.00 at the end of 10 years. Its operating expenses amount to Q3,500.00
annually during the 5 years and Q4,500.00 during the last 5. The increases in operating expenses are the
expected for maintenance, repair and loss of efficiency due to use. The minimum required
is 15%
a) Make the graph and determine the annual cost and make the respective comparison between the two machines.
b) Select the most feasible machine.
c) Determine the future worth in year 10 for both machines.
d) Determine the quarterly value during the 10 years for both machines.
e) As an Engineer you are asked to determine an action plan, define objectives, activities to overcome the best
alternative and estimating a new
f) Conclusions and recommendations
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