Question
Kruber company located Tennessee is considering two different makes of a blow molding machine for one of its automotive products. The cost data for the
Kruber company located Tennessee is considering two different makes of a blow molding machine for one of its automotive products. The cost data for the two alternatives are provided in table below. MARR =12%. Which machine should be bought after you B/C ratio analysis?
| Machine X | Machine Y | |
| Initial Cost | $150K | $275K |
| Annual Operating Cost | $55K | $60K |
| Benefits (per year) | $100K | $120K |
| Salvage Value | $20K | $40K |
| Life in years | 9 | 10 |
*** Be careful these machines have different life years ***
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Intermediate Financial Management
Authors: Eugene F. Brigham, Phillip R. Daves
11th edition
978-1111530266
