End of six years service is evaluated to be negligible

Reference no: EM13451794

Two alternative replacement machines are being consided to replace a current one. Machine A has a first cost of $75,200 and its salvage value at the end of six years of estimated service life is $21,000. The operating costs of this machine are estimated to be $6,800 per year. Machine B has a first cost of $44,000, and its salvage value at the end of six years' service is estimated to be negligible. The annual operating costs will be $11,500. Compare these two using a present worth criteria at i = 13%.

Reference no: EM13451794

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