Question
A construction engineer is trying to determine which machine will improve the construction productivity on site. Machine X has a first cost of $88,000, an
A construction engineer is trying to determine which machine will improve the construction productivity on site. Machine X has a first cost of $88,000, an annual maintenance and operations cost of $31,000, and $41,000 salvage value, and it will improve revenues by $96,000 per year. Machine Y has a first cost of $146,000, an annual maintenance and operations cost of $28,000, and $47,000 salvage value, and it will increase revenues by $120,000 per year. The companys MARR is 10% per year, and it uses a 3-year study period for economic evaluations. Calculate the incremental ROR, and identify the machine the manager should select.
The incremental ROR is
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