A bank is trying to determine which of two machines to rent for check processing. Machine 1 rents for

$10,000 per year and processes 1000 checks per hour.

Machine 2 rents for $15,000 per year and processes 1600 checks per hour. Assume that machines work 8 hours a day, 5 days a week, 50 weeks a year. The bank must process an average of 800 checks per hour, and the average check processed is for $100. Assume an annual interest rate of 20%. Then determine the cost to the bank (in lost interest) for each hour that a check spends waiting for and undergoing processing.

Assuming that interarrival times and service times are exponentially distributed, which machine should the bank rent?