Question
Two machines have data as shown below. Using an incremental internal rate of return, which machine should be selected: Machine A Machine B Initial cost
Two machines have data as shown below. Using an incremental internal rate of return, which machine should be selected:
| Machine A | Machine B | |
| Initial cost | $250,000 | $476,000 |
| Life in years | 2 | 3 |
| Salvage after life | 12% | 18% |
| Benefits per year | $184,000 | $294,000 |
| Costs per year | $62,900 | $126,800 |
| MARR | 12% | |
| Inflation (increase in all costs) | 3% | |
| Increase in benefits | 7% |
Group of answer choices
Machine A
Machine B
Either machine will be fine.
Reject both machines.
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Managerial Accounting
Authors: Libbey Phillips Whitecotton
2nd Edition
1259240908, 978-1259240904
