Determine which alternative should be selected

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Reference no: EM132021938

Table below shows the cash flow data of TWO MEAs under consideration. If the minimum required interest rate is 12% per year, determine which alternative (X or Y) should be selected by performing the following equivalent-worth analyses respectively:

	Machine X	Machine Y
Investment cost ($)	400000	500000
Annual operating cost ($)	50000	40000
Annual operating revenue ($)	270000	240000
Salvage value ($)	65000	95000
Useful life (years)	2	3

(a) Future-worth (FW) analysis with co-terminated assumption applied for a study period of three years.

(b) Present-worth (PW) analysis with repeatability assumption applied for a study period of six years.

(d) Under repeatability assumption, perform an AW analysis on Machine X with a study period of six years. Does it make any difference to the AW result for Machine X in part (b)(iii) above?

Reference no: EM132021938

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