Two machines are being considered for manufacturing process

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Reference no: EM131308266

Two machines are being considered for a manufacturing process. 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 years. Extra income taxes (i.e., cash flow costs) are estimated at $2, 400 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 mutually exclusive alternatives by the het present worth method at i = 12% year and choose which machine to purchase.

Reference no: EM131308266

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