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8.11 A manufacturing company has space for one additional automated machine in its factory. It can purchase either Machine A which produces gadgets or Machine
8.11 A manufacturing company has space for one additional automated machine in its factory. It can purchase either Machine A which produces gadgets or Machine B which produces widgets. Economic data for the two machines are presented in Table 8.10. Initial Cost ($) Table 8.10 Costs and benefits for two machines. Machine A 310 000 Machine B Revenue ($ pa) 70 000 Maintenance ($ pa) 15 000 Life (years) 10 Scrap value ($) 20 000 370 000 120 000 20 000 5 0 (a) Compute the net present value, equivalent annual worth, B/C ratio for each machine using a discount rate of 7% p.a. and a planning horizon of 10 years. (b) Which machine should be chosen and why
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