Decide between two candle making machines to boost capacity

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Reference no: EM131721930

Cal's Candle Company is trying to decide between two candle making machines to boost capacity.

The Wickernator has an initial cost of $195991. It can process 519 candles per hour. It requires 4 employees to run it. Annual expenses are estimated to be $6438. The machine has a lifespan of 6 years and a salvage value of $29806.

The MeltMaster has an initial cost of $180200. It can process 558 candles per hour and requires 3 employees to run it. Annual expenses are $5011. The machine has a lifespan of 4 years and will have a salvage value of $35890.

The company pays its employees $45321 per year. The company runs an average of 1887 hours per year. The company has a profit margin of $0.61 per candle.

Comparing the two alternatives using present worth analysis, what is the present worth of the Wickernator? Use an interest rate of 8% compounded annually to make your calculation.

Note:

You only need to calculate the present worth of the Wickernator. You do not need to calculate the present worth of the MeltMaster. You do need to know the lifespan of the MeltMaster to make the correct calculation

If you are taking this quiz again, be sure you are making the calculation for the correct machine.

Enter your answer as 12345

Round your answer. Do not use a dollar sign ("$"), any commas ("$"), or a decimal point (".").

Reference no: EM131721930

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