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pls dunk this problem, show all work! 6) (35 points) Yoda Industries is considering the following two alternatives for its redesigned production operation. MARR is
pls dunk this problem, show all work!
6) (35 points) Yoda Industries is considering the following two alternatives for its redesigned production operation. MARR is 10% per year compounded annually. The existing machine is expected to have a salvage value of $20,000 at the end of its useful life of 5 years. O&M costs have been $70,000/yr. Currently the machine has a market value of $100,000. Alternative 1 (New high-capacity machine) Sell the existing machine at its market value and purchase a new high-capacity machine. This new machine will cost $320,000 and is expected to have a salvage value of $50,000 at the end of 5 years. Its annual O&M costs are expected to be $80,000. Alternative 2 (Existing machine + new low-capacity machine) Keep the existing machine and buy a new low-capacity machine in order to increase production capacity. This low-capacity machine will cost $150,000, have a salvage value of $20,000 in 5 years, and annual O&M costs are expected to be $30,000. a) (15 points) Compute the EUAC of Alternative 1 for a planning horizon of 5 years. b) (15 points) Compute the EUAC of Alternative 2 for a planning horizon of 5 years. c) (5 points) Based on an annual cost comparison, what is your recommendationStep by Step Solution
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