The two machines shown are being considered for a chip manufacturing operation. Assume the MARR is a real return of 11% per year and that the inflation rate is 6.1% per year. Machine First Cost, $ M&O, $ per year Salvage Value, $ Life, years A B -148,000 -70,000 40,000 -1,060,000 -5,000 200,000 00 Problem 14.056.a: Compare two alternatives based on their AW values without inflation consideration Which machine should be selected on the basis of an annual worth analysis if the estimates are in constant-value dollars? What is the annual worth of the selected alternative? Select machine A The annual worth of the alternative is $ -121600 0

The two machines shown are being considered for a chip manufacturing operation. Assume the MARR is a real return of 11% per year and that the inflation rate is 6.1% per year. Machine First Cost, $ M&O, $ per year Salvage Value, $ Life, years A B -148,000 -70,000 40,000 -1,060,000 -5,000 200,000 00 Problem 14.056.a: Compare two alternatives based on their AW values without inflation consideration Which machine should be selected on the basis of an annual worth analysis if the estimates are in constant-value dollars? What is the annual worth of the selected alternative? Select machine A The annual worth of the alternative is $ -121600 0

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 22E

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