What assumptions have you made and why

Reference no: EM132165325

Question: Which machine should be chosen if a firm uses an interest rate of 12%? Machine A has a life of 15 years, a first cost of $45,000, annual O&M of $8000 per year, a salvage value of $6000, and an overhaul in year 9 that costs $16,000. Machine B has a life of 20 years, a first cost of $50,000, annual O&M of $8400 per year, a salvage value of $4000, and an overhaul in year 12 that costs $20,000. The machines will be used for at least 25 years. How much does the best choice save (either PW or EAC)? What assumptions have you made and why?

Reference no: EM132165325

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