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Modern Industries Ltd. (MIL) is considering to invest in a lathe machine. There are three machines offered by three different manufacturers. The price quotations and
Modern Industries Ltd. (MIL) is considering to invest in a lathe machine. There are three machines offered by three different manufacturers. The price quotations and operational costs for the three machines are given below: Manufacturers Western Engineering Jain Engineering Reddy Industries Ltd. (WEL) Ltd. (JEL) Ltd. (RIL) Cost of machine (Rs.) 8,00,000 12,00,000 18,00,000 Annual cost of 1,60,000 1,20,000 1,00,000 operations (Rs.) Useful life (years) 5 8 10 The cost of capital for the company is 15%. You are required to find out the machine that should be selected for investment by MIL, using a suitable appraisal criterion
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