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There are three mutually exclusive alternatives, as pressing machines for a production line that the Auto Manufacturing Co. is considering to purchase. The table below
There are three mutually exclusive alternatives, as pressing machines for a production line that the Auto Manufacturing Co. is considering to purchase. The table below shows their pertinent cash flow and useful life information. The MARR is 7% per year, compounded semi-annually. Machine A Machine B Machine C Purchasing Cost $50,000 $21,000 $20,000 $6500 per Annual Net Revenue $4000 in year 1 and it increases by 3% every year $7000 every 4 years year Salvage value $8,000 $4,000 Useful life, years 15 10 1. Which of these three machines would you recommend to be selected? (23 points) 2. What should the initial investment of Machine C change to in order for that machine to be selected? (7 points) There are three mutually exclusive alternatives, as pressing machines for a production line that the Auto Manufacturing Co. is considering to purchase. The table below shows their pertinent cash flow and useful life information. The MARR is 7% per year, compounded semi-annually. Machine A Machine B Machine C Purchasing Cost $50,000 $21,000 $20,000 $6500 per Annual Net Revenue $4000 in year 1 and it increases by 3% every year $7000 every 4 years year Salvage value $8,000 $4,000 Useful life, years 15 10 1. Which of these three machines would you recommend to be selected? (23 points) 2. What should the initial investment of Machine C change to in order for that machine to be selected? (7 points)
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