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5. Liberty Manufacturing Co, is currently considering two alternatives to replace its stamping equipment. Two machines have been selected by the manufacturing engineers for this
5. Liberty Manufacturing Co, is currently considering two alternatives to replace its stamping equipment. Two machines have been selected by the manufacturing engineers for this job. The following table shows the cost information for both proposals. Machine X S130,000 $25,000 for the first 10 years and $9,000 for the next 10 years 6 years $38,000 Machine Y Initial cost $106,000 $12,500 per year for 20 years. 8 years Benefits/year Life Salvage value MARR $22,000 7% a. b. c. Calculate the PW for Machine X, based on a 10-year horizon (Value 6 points) Calculate the PW for Machine Y, based on a 10-year horizon (Value 6 points) Determine the best option based on a 10-year horizon (Value 3 points) 5. Liberty Manufacturing Co, is currently considering two alternatives to replace its stamping equipment. Two machines have been selected by the manufacturing engineers for this job. The following table shows the cost information for both proposals. Machine X S130,000 $25,000 for the first 10 years and $9,000 for the next 10 years 6 years $38,000 Machine Y Initial cost $106,000 $12,500 per year for 20 years. 8 years Benefits/year Life Salvage value MARR $22,000 7% a. b. c. Calculate the PW for Machine X, based on a 10-year horizon (Value 6 points) Calculate the PW for Machine Y, based on a 10-year horizon (Value 6 points) Determine the best option based on a 10-year horizon (Value 3 points)
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