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Annual equivalent cost as a positive number

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Reference no: EM131940428

"Your company needs a machine for the next 20 years. You are considering two different machines.

Machine A

Installation cost ($): 2,500,000

Annual O&M costs ($): 88,000

Service life (years): 20

Salvage value ($): 62,000

Annual income taxes ($): 50,000

Machine B

Installation cost ($): 1,250,000

Annual O&M costs ($): 111,000

Service life (years): 10

Salvage value ($): 46,000

Annual income taxes ($): 45,000

If your company s MARR is 18%, determine which machine you should buy. Assume that machine B will be available in the future at the same costs. Enter the Annual Equivalent Cost as a positive number of the preferred machine."

Reference no: EM131940428

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