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Machine Initial cost, $ Annual cost, $/year Salvage value, $ Life, years O-$87,840 The estimates for the machines are for two mutually exclusive alternatives. The ca of money is 10% per year. The present worth of Machine X is closest to: O-$103,910 O$114,310 X -66,000 -10,000 10,000 6 O$65.270 Y -46,000 -15,000 24,000 3

Machine Initial cost, $ Annual cost, $/year Salvage value, $ Life, years O-$87,840 The estimates for the machines are for two mutually exclusive alternatives. The ca of money is 10% per year. The present worth of Machine X is closest to: O-$103,910 O$114,310 X -66,000 -10,000 10,000 6 O$65.270 Y -46,000 -15,000 24,000 3

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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### Machine Cost Analysis This study compares two machines, X and Y, based on various financial parameters. The goal is to determine which machine offers a better financial advantage under given conditions. ### Machine Specifications | Machine | X | Y | |------------------|---------|---------| | **Initial Cost ($)** | -66,000 | -46,000 | | **Annual Cost ($/year)** | -10,000 | -15,000 | | **Salvage Value ($)** | 10,000 | 24,000 | | **Life (years)** | 6 | 3 | ### Financial Overview - **Mutual Exclusivity**: The estimates consider the machines as two mutually exclusive alternatives. - **Cost of Money**: The interest rate or cost of money is 10% per year. ### Calculation The task involves finding which option closely represents the present worth of Machine X: - Options: - $87,840 - $103,910 - $114,310 - $65,270 ### Conclusion Using the given financial parameters, the option matching closest to the computational value needs to be chosen based on present worth analysis. This involves calculating the net present value (NPV) considering the initial costs, annual costs, salvage values, the lifespan of the machines, and the given interest rate.
Transcribed Image Text:### Machine Cost Analysis This study compares two machines, X and Y, based on various financial parameters. The goal is to determine which machine offers a better financial advantage under given conditions. ### Machine Specifications | Machine | X | Y | |------------------|---------|---------| | **Initial Cost ($)** | -66,000 | -46,000 | | **Annual Cost ($/year)** | -10,000 | -15,000 | | **Salvage Value ($)** | 10,000 | 24,000 | | **Life (years)** | 6 | 3 | ### Financial Overview - **Mutual Exclusivity**: The estimates consider the machines as two mutually exclusive alternatives. - **Cost of Money**: The interest rate or cost of money is 10% per year. ### Calculation The task involves finding which option closely represents the present worth of Machine X: - Options: - $87,840 - $103,910 - $114,310 - $65,270 ### Conclusion Using the given financial parameters, the option matching closest to the computational value needs to be chosen based on present worth analysis. This involves calculating the net present value (NPV) considering the initial costs, annual costs, salvage values, the lifespan of the machines, and the given interest rate.
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