Lockheed martin management is considering your proposal to

Reference no: EM13378684

Lockheed Martin management is considering your proposal to purchase a new water jet machine for cutting 14 gauge aluminum sheets into C-130 fuselage parts. This is a much cleaner method than the current method of using an oxyacetylene cutting torch. You have evaluated other machines and alternate methods and your conclusion is as follows. This water jet machine costs $1.9 million now with an expected salvage value at the end of 12 years of $300,000. You also calculated in your proposal the estimated annual operating costs of the water jet machine of $450,000 per year. The management asks you to take capital recovery and the annual operating cost into consideration when you calculate the AW of this machine. What is the AW if your MARR is 14%? can u explain the answer please?

Reference no: EM13378684

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