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A manufacturing company has two options to buy a machine for improving its production volume. The cash flow details of the two options (machine-1 or
A manufacturing company has two options to buy a machine for improving its production volume. The cash flow details of the two options (machine-1 or machine-2) are given as follows; Machine- 1: the Initial purchase cost = $5,660,000, salvage value = $1,250,000, useful life = 12 years. The operating cost for Machine-1 is $13 per item produced. Machine-1 can produce 54 items in one hour. Machine-2: the Initial purchase cost = $6,780,000, salvage value = $1,410,000, useful life = 12 years, and the operating cost for Machine-2 is $10 per item produced. Machine-2 can produce 62 items in one hour. A. If the company MARR is 10.5% per year, how many hours, the Machines have to operate per year for the equivalent uniform annual worth of cash flows of both machines to be equal? B. Develop and show the graphical presentation of your analysis to the two options and comment on the results of your analysis
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