Question
16. Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are
16. Esquire Company needs to acquire a molding machine to be used in its manufacturing process. Two types of machines that would be appropriate are presently on the market. The company has determined the following (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) |
Machine A could be purchased for $42,000. It will last 10 years with annual maintenance costs of $1,400 per year. After 10 years the machine can be sold for $4,410. |
Machine B could be purchased for $35,000. It also will last 10 years and will require maintenance costs of $5,600 in year three, $7,000 in year six, and $8,400 in year eight. After 10 years, the machine will have no salvage value.
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