Machines be used to justify more expensive equipment

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Two machines are being considered for the production of landing gears for Cessna Aircraft Co. Machine A nas an initial cost of $1,000,000 with a variable production cost of $100/hour. The machine is expected to last 6 years. Machine ‘A’ requires resetting work that will cost $30,000 after every 1000 hours. Machine B has an initial cost of $2,000,000 with a variable production cost of $10/hour. The machine is expected to last 9 years. The resetting work on Machine ‘B’ costs $10,000 after every 3000 hours. How many hours per year must the machines be used to justify the more expensive equipment? Assume 10%/year interest rate.

Reference no: EM131927565

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