Let's say that Saint Andrews Chips considers a 4th option regarding the industrial grade bagging machine. Saint Andrews Chips engineers have determine that if the firm buys the machine (without the service contract method can be devised by their maintenance organization to preserve and actually enhance the capability of the machine over time. By reinvesting 15% of the annual cost savings back into new machine parts the engineers can increase the cost savings at a 5% annual rate. For example, at the end of year one, 15% of the $25,000 cost savings ($3,750) is reinvested in the machine: the net cash flow is thus $21.250. Next vest the cash flow from cost saw