a. What is the incremental cash flow for year 4 when comparing machines B and C?

b. When comparing machines B and C, what approach do you use ? (Either ERR or IRR, ERR, IRR)

c. Indicate which alternative is best option for the company (Machine A, Machine B, Machine C, Nothing)

d. Which of the following is correct when considering the ERR approach, why? (edited)

- FW (receipts) at ERR = FW (distributements) at MARR

- FW (receipts) at MARR = FW (distributements) at ERR

- FW (receipts) at ERR = FW (distributements) at ERR

- FW (receipts) at MARR = FW (distributements) at MARR

e. What is the incremental cash flow for year 3 when comparing machines A and C?

f. Indicate which is true when comparing machines A and C

- ERRc-a > MARR

- IRRc-a

- IRRc-a > MARR

- ERRc-a A company has to purchase a new machine to maintain its level of production. The company is considering three different machines. The costs, savings and service life related to each machine are listed in the table below. First Cost Annual savings Annual maintenance Machine A $26,000 $12,000 $2,750 Machine B Machine C $30,000 $28,000 $12,500 $12,750 $2,500 the first year $ 1,750 and increasing by $750 every year thereafter $6,000 $11,500 6 years 3 years Salvage value Service life $12,500 3 years Given a MARR of 12% and considering the rate of return method: A company has to purchase a new machine to maintain its level of production. The company is considering three different machines. The costs, savings and service life related to each machine are listed in the table below. First Cost Annual savings Annual maintenance Machine A $26,000 $12,000 $2,750 Machine B Machine C $30,000 $28,000 $12,500 $12,750 $2,500 the first year $ 1,750 and increasing by $750 every year thereafter $6,000 $11,500 6 years 3 years Salvage value Service life $12,500 3 years Given a MARR of 12% and considering the rate of return method