8. 6.34 Poly-Chem Plastics is considering two types of injection molding machines: hydraulic and electric. The hydraulic press (HP) will have a first cost of $600,000, annual costs of $200,000, and a salvage value of

$70,000 after 5 years. Electric machine technology (EMT) will have a first cost of $800,000, annual costs of $150,000, and a salvage value of

$130,000 after 5 years.

1. Use an AW-based equation to determine the ROR on the extra investment required for the EMT alternative.

2. Determine the machine to select, if the MARR is 16% per year.
3. Plot the AW versus i graph for each alternative’s cash flows and utilize it to determine the largest MARR which will justify the extra investment of $200,000 in EMT.