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What is the annual worth of the two machines

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Reference no: EM132775030

Problem 1: An engineer uses an economic analysis to determine which of two different machines to purchase. All the machines that are being considered are capable of performing the same task. Assume that the minimun atractive rate of return is 12% compounded monthly, what is the annual worth (EAW) of the two machines? which is the best economic investment?

Machine X
Initial cost $8,000
Estimated life 3yr
Salvage value $1,000
Monthly mant cost $1,500
Monthly incomes $3,550

Machine Y
Initial cost $11,000
Estimated life 3yr
Salvage value $1,500
Monthly mant cost $1,475
Monthly incomes $3,475

  1. EAWx = $1784.76, EAWy = $1646.83, x is the best investment
  2. EAWx =$1784.76, EWAy = $1646.83, y is the best investment
  3. EAWx =$807.53, EWAy = $669.51, x is the best investment
  4. EAWx =$669.51, EAWy = $807.53, y is the best investment

Reference no: EM132775030

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