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For machines U and V, details are provided. What will be the Delta IRR and which machine should be selected? Machine U Machine V Initial
For machines U and V, details are provided. What will be the Delta IRR and which machine should be selected?
Machine U | Machine V | |
Initial cost | $336,000 | $430,000 |
Life in years | 5 | 6 |
Inflation (for costs and benefits) | 5% | p. y. |
MARR | 9.69% | p. y. c. y. |
Project life | 12 | years |
Salvage value of machine today | $47,040 | $60,200 |
Machine market value with 2 years of use | $161,280 | |
First year estimated costs | $43,500 | $49,800 |
First year estimated benefits | $126,400 | $134,935 |
Group of answer choices
3.83%, go with Machine U
8.42%, go with Machine U
9.69%, go with either Machine U or V
11.61%, go with Machine V
Context:
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