Weldon Cutting Tools Company is considering the purchase of a new broaching machine to produce finished parts. Two types of broaching machines are available on the market. The lives of Machine A and Machine B are 8 years and 10 years, respectively. The machines have the following receipts and disbursements:

Assume an after€tax MARR of 10% and a marginal tax rate of 30%.
(a) Which machine would be most economical to purchase under an infinite planning horizon? Explain any assumption that you need to make about future alternatives.
(b) Determine the break€even annual O&M costs for Machine A so that the present worth's of Machines A and B are the same.
(c) Suppose that the required service life of the machine is only five years. The estimated salvage values at the end of the required service period are estimated to be $13,000 for Machine A and $18,500 for Machine B. Which machine is more economical?

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Machine A $65,000 Item Machine B First cost Service life $83,500 8 years 10 years Salvage value $5,000 $8,000 Annual O&M costs $7,500 $5,800 Depreciation (MACRS) 7 year 7 year