RTC manufacturing is a sheet metal fabrication company in Southern Ontario. The company is choosing between two sheet metal cutting machines; CNC plasma and CNC laser. MARR ( Minimum Acceptable Rate of Return) for RTC Manufacturing is 9%. Answer the following questions using the information in the table below.

	CNC plasma	CNC laser
Down Payment	$90,000	$140,000
Annual Payment	$1,400	$1,900
Maintenance cost	$1,200 for the first year, increasing by 5% per year thereafter	$800 for the first year, increasing by 4% year thereafter
Operating cost per year	$6,300	$4,100
Salvage value	$20,000	$50,000
Service Life	15 years	20 years

a) What is the assumption made to compare mutually exclusive alternatives of different lives?

b) Using Annual Worth comparison, which cutting machines should be selected?

c) Using Present Worth comparison, which cutting machines should be selected?

d) Do both methods ( Present Worth and Annual Worth) always yield to the same decision?

e) For a fifteen-year study period, what salvage value for the CNC laser would make it better choice?