Savings of $5600 per year can be achieved through either a $14 000 machine (A) with a seven-year service life and a $2000 salvage value, or a $25 000 machine (B) with a 10-year service life and a $10 000 salvage value. If the MARR is 8 percent, which machine is the better choice, and what is the annual benefit or cost of the better choice? Use annual worth comparison.

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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Savings of $5600 per year can be achieved through either a $14 000 machine (A) with a seven-year service life and a $2000 salvage value, or a $25 000 machine (B) with a 10-year service life and a $10 000 salvage value. If the MARR is 8 percent, which machine is the better choice, and what is the annual benefit or cost of the better choice? Use annual worth comparison. 

 

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