Exercise 2-1 Cost comparison method

- Comparison ofalternatives A company is considering buying a punching machine. Two possible systems are under investigation. They are characterised by the following data:

Brand A Brand B Initial outlay € 30,000 ~€2l,ÖÖÖ"

Fixed costs per year € 1,500 € 1,200 Variable costs per punching proc- € 0.30 € 0.32 ess Number of possible punching acts 40,000 45,000 pro year Life 10 years 10 years Interest rate 8.0 % 8.0 %

Assess the investment with the help of the cost comparison method.