OLVE STEP BY STEP Carp, Inc. wants to evaluate two machines for packaging their products. Machine A: Initial cost is $700,00 1st year O&M cost is 18,000; this cost increases $900 each year. The annual benefits are $154,000 It can be sold at the end of 10 years useful life for $145,000 Machine B: Initial cost is $1,600,00 1st year O&M cost is 28,000; this cost increases $650 each year. The annual benefits are $300,000 It can be sold at the end of 20 years useful life for $210,000 The companies uses an interest rate of 15% Use annual cash flow analysis to decide which is the most desirable alternative.

OLVE STEP BY STEP Carp, Inc. wants to evaluate two machines for packaging their products. Machine A: Initial cost is $700,00 1st year O&M cost is 18,000; this cost increases $900 each year. The annual benefits are $154,000 It can be sold at the end of 10 years useful life for $145,000 Machine B: Initial cost is $1,600,00 1st year O&M cost is 28,000; this cost increases $650 each year. The annual benefits are $300,000 It can be sold at the end of 20 years useful life for $210,000 The companies uses an interest rate of 15% Use annual cash flow analysis to decide which is the most desirable alternative.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

ФЫ В А П Р О ВАПРОЛДЗАПРОЛДЖЭ
ЯЧСМИТНЧСМИТЬБНСМИТЬБЮ
SOLVE STEP BY STEP
2 Carp, Inc. wants to evaluate two machines for
3 packaging their products.
4
Machine A:
5
6
7
8
9
10
11
12
13
Initial cost is $700,00
1st year O&M cost is 18,000; this cost
increases $900 each year.
The annual benefits are $154,000
It can be sold at the end of 10 years useful
life for $145,000
Machine B:
Initial cost is $1,600,00
1st year O&M cost is 28,000; this cost
14
15
16
17
18
19 life for $210,000
20
21
increases $650 each year.
The annual benefits are $300,000
It can be sold at the end of 20 years useful
The companies uses an interest rate of 15%
22
Use annual cash flow analysis to decide
23 which is the most desirable alternative.
24 Build model
ИЦУКЕНГ ШУКЕНТ ШЩ ЗКЕНГШ щзхъ

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