An engineer uses an economic analysis to determine which of two different machines to purchase. All the machines that are being considered are capable of performing the same task. Assume that the minimum atractive rate of return is 12% compounded monthly. What is the annual worth (EAW) of the two machines? Which is the best economic investment?

Machine X Machine Y

Initial cost $8,000 $11,000

Estimated life 3 years 3 years

Salvage value $1,000 $1,500

Monthly maintenance costs $1500 $1475

Monthly incomes $3,550 $3,475

	1.	EAWX = $1784.76, EAWY = $1,646.83, Y is the best investment.
	2.	EAWX = $1784.76, EAWY = $1646.83, X is the best investment
	3.	EAWX = $807.53 EAWy = $669.51, X is the best investment
	4.	EAWX = $669.51, EAWY = $807.53, Y is the best investment.