Machines that have the following costs are under consideration for a robotized welding process. Using an interest rate of 10% per year, determine which alternative should be selected on the basis of a present worth analysis? Machine X Machine Y First cost, $ -200,000 -400,000 Annual operating cost, $ per year -40,000 -50,000 Salvage value, S 80,000 90,000 Life, years 3 6 Solution: PW Machine X- S (Use the right sign) PW Machine Y= $ (Use the right sign) So, the best alternative is Machine

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Machines that have the following costs are under consideration for a robotized welding process. Using an interest rate of 10% per year, determine which
alternative should be selected on the basis of a present worth analysis?
Machine X
Machine Y
First cost, $
-200,000
-400,000
Annual operating cost, $ per year
-40.000
-50,000
Salvage value, $
80,000
90,000
Life, years
3
Solution:
PW Machine x =5
(Use the right sign)
PW Machine Y = 5
(Use the right sign)
So, the best alternative is Machine
Transcribed Image Text:Machines that have the following costs are under consideration for a robotized welding process. Using an interest rate of 10% per year, determine which alternative should be selected on the basis of a present worth analysis? Machine X Machine Y First cost, $ -200,000 -400,000 Annual operating cost, $ per year -40.000 -50,000 Salvage value, $ 80,000 90,000 Life, years 3 Solution: PW Machine x =5 (Use the right sign) PW Machine Y = 5 (Use the right sign) So, the best alternative is Machine
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