Answered step by step
Verified Expert Solution
Question
1 Approved Answer
5B. To reduce the operating cost, a company plans to purchase only one of the four automatic machines available in the market. All the four
5B. To reduce the operating cost, a company plans to purchase only one of the four automatic machines available in the market. All the four machines have ten years of (06) life. A summary of economic analysis performed by the company is given in the table below (with missing numbers marked as A, B, C, D, E, F and G). The company's MARR is 10%. Particulars Machines M1 M2 M3 M4 Investment (RS) A -13000 -30000 -60000 Annual Cost (Rs) -48200 -47400 -44250 -39800 Annual Savings (Rs) +50000 +50000 +50000 +50000 IRR (%) 12% B 14% E Machines Compared 2 to 1. 3 to 2 4 to 3 Incremental Investment (Rs) -3000 -17000 -30000 Incremental cash flow (Rs) +800 J C F Incremental ROR (%) 23.5% D G (i) Fill the missing data and recommend which machine should be purchased. (ii) Suppose that the above alternatives are independent, and MARR is 13%, which machine(s) should the company select
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started