Question
A small manufacturing firm is considering purchasing a new boring machine to modernize one of its production lines. Two types of boring machine are available
A small manufacturing firm is considering purchasing a new boring machine to modernize one of its production lines. Two types of boring machine are available on the market. The machines are described by the following characteristics:
| Item | Machine A | Machine B |
| First cost | $ 7,248 | $ 8,939 |
| Service life | 8 years | 10 years |
| Salvage value | $ 616 | $ 1,180 |
| Annual O&M costs | $729 | $ 585 |
| CCA rate | 30% | 30% |
Determine the break-even annual O&M costs for machine A so that the present worth of machine A is the same as that of machine B. Use a MARR (after tax) of 10% and a marginal tax rate of 30%.
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Fundamental Accounting Principles
Authors: Larson Kermit, Tilly Jensen
Volume I, 14th Canadian Edition
71051503, 978-1259066511, 1259066517, 978-0071051507
