Three machines are being considered for purchase. If the interest rate is 10%, which machine should be bought? a) Select the best alternative using annual worth analysis. b) Select the best alternative using present worth analysis. A B C Initial cost 150000 210000 300000 Annual operating cost 20000 15000 8000 Repairs will have to be made every 5 years 20000 50000 38000 Salvage value 40000 60000 80000 Useful life 10 years 15 years 20 years
Three machines are being considered for purchase. If the interest rate is 10%, which machine should be bought?
a) Select the best alternative using annual worth analysis.
b) Select the best alternative using present worth analysis.
A B C
Initial cost 150000 210000 300000
Annual operating cost 20000 15000 8000
Repairs will have to be made every 5 years 20000 50000 38000
Salvage value 40000 60000 80000
Useful life 10 years 15 years 20 years
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