6.46 A small manufacturing firm is considering purchasing a new machine to mod- ernize one of its current production lines. Two types of machines are available on the market. The lives of machine A and machine B are four years and six years, respectively, but the firm does not expect to need the service of either machine for more than five years. The machines have the expected receipts and disbursements given in Table P6.46. TABLE P6.46 Item Machine A Machine B First cost $6,500 $8,500 Service life 4 years 6 years Estimated salvage value $600 $1,000 Annual O&M costs $800 $520 Change oil filter every other year $100 None Engine overhaul $200 (every 3 years) $280 (every 4 years) The firm also has another option: leasing a machine at $3,000 per year, which is fully maintained by the leasing company. After four years of use, the salvage value for machine B will remain at $1,000. (a) How many decision alternatives are there? (b) Which decision appears to be the best at i 10%? 647