10. 10.21 May-Kit Metal Fabricators, Inc. is located in a relatively high inflation country. Two machines under consideration have estimated cash flows as shown.

(a) Use a PW analysis to select one machine at i = 15% and f = 12% per year.

(b) (Spreadsheet exercise) The fab manager believes the AOC for A is quite high, plus he favors this alternative. Determine the maximum AOC for A to reach breakeven between A and B. Table Summary: A table divided into 3 columns shows estimated cash flows for two machines. The column headers are marked as: Machine; A; and B. Machine A B First cost, $ −10,000 −20,000 AOC, $ per year −8,000 −3,000 Salvage value, $ 3,000 6,000 Life, years 10 10