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DelRay Foods must purchase a new gumdrop machine. Two machines are available. Machine 7745 has a first cost of $3,800, an estimated life of 10
DelRay Foods must purchase a new gumdrop machine. Two machines are available. Machine 7745 has a first cost of $3,800, an estimated life of 10 years, a salvage value of $1,000, and annual operating costs estimated at $0.01 per 1,000 gumdrops. Machine A37Y has a first cost of $8,000, a life of 10 years, and no salvage value Its annual operating costs will be $240 regardless of the number of gumdrops produced. MARR is 6%/year, and 30 million gumdrops ware produced each year. a. What is the annual worth of each alternative? Machine 7745 AW$ Machine A37Y Aw= $ Round your answer to the nearest whole dollar. Tolerance is +/- 1 b. What is the decision rule for determining the preferred machine based on annual worth ranking? c. Which machine should be recommended? Financial planners (and engineering economists) unanimously encourage people to seek out the highest rate of return possible within their personal level of risk tolerance. To illustrate this point, they frequently produce a table similar to the one below. Fill in the blank cells in this table assuming that your goal is to have $1,100,000on your 65th birthday and that deposits start on your 26th birthday and continue annually in the same amount on each birthday up to and including your 65th birthday Interest Rate Earned Amount of Required Annual Deposit 4%/year %/year 6 %/year 7%/year 8%/year 9%/year Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is 10
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