The manager of a canned food processing plant must decide between two different labelling machines. Machine A will have a first cost of RM 42,000, an annual operating cost of RM 28,000, and a service life of 4 years. Machine B will cost RM 51,000 to buy and will have an annual operating cost of RM 17,000 during its 4-year life. At an interest rate of 10% per year, select the best machine on the basis of a present worth analysis.

The manager of a canned food processing plant must decide between two different labelling machines. Machine A will have a first cost of RM 42,000, an annual operating cost of RM 28,000, and a service life of 4 years. Machine B will cost RM 51,000 to buy and will have an annual operating cost of RM 17,000 during its 4-year life. At an interest rate of 10% per year, select the best machine on the basis of a present worth 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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Question

Subject : Economy and Engineering Management

The manager of a canned food processing plant must decide between two different
labelling machines. Machine A will have a first cost of RM 42,000, an annual operating
cost of RM 28,000, and a service life of 4 years. Machine B will cost RM 51,000 to buy
and will have an annual operating cost of RM 17,000 during its 4-year life. At an interest
rate of 10% per year, select the best machine on the basis of a present worth analysis.

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