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The injection molding machines are need to be replaced. The list is narrowed down to two options based on various parameters like screw diameter, injection

The injection molding machines are need to be replaced. The list is narrowed down to two options based on various parameters like screw diameter, injection pressure, injection capacity, rate, and screw rpm and so on. Please take a look at the specs and make a recommendation. The Cincinnati Milacron Plastic Injection Molding Machine costs $80,000 and the Kawaguchi machine costs $120,000. Based on the capacity of these machines, it can be safely estimated that the revenue for Cincinnati will be $30,000 for year 1 and $41,500 for Kawaguchi. It is also assumed that the capacity could be increased and thereby the revenue by 20% year after year for the next few years. The maintenance costs will be $2,000 and the amount will increase by $5,000 year after year for the next few years. It can be assumed that the maintenance is the same for both machines. In talking with other companies who use these machines, these machines are capable of producing products for 5 years before major breakdowns occur. Since this is a rough estimate, you can use straight line depreciation. Tax rate for this company is 40%. Assume an after-tax MARR of 15% and calculate the PW of the after tax cash flow. Also, perform a sensitivity analysis on MARR with plus or minus 5%. (Hint: use DATA TABLE)

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