Determine the break-even annual om costs

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A small manufacturing firm is considering purchasing a new boring machine to modernize one of its production lines. Two types of boring machine are available on the market. The machines are described by the following characteristics:

Item

Machine A

Machine B

First cost

$ 7,160

$ 9,007

Service life

8 years

10 years

Salvage value

$ 513

$ 1,099

Annual O&M costs

$729

$ 688

CCA rate

30%

30%

Determine the break-even annual O&M costs for machine A so that the present worth of machine A is the same as that of machine B. Use a MARR (after tax) of 10% and a marginal tax rate of 30%.

Reference no: EM133065934

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