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Using before tax cash flow analysis, determine the annual crossover volume between 2 machines given the data below. Use an interest rate of 11.5%. Life
Using before tax cash flow analysis, determine the annual crossover volume between 2 machines given the data below. Use an interest rate of 11.5%. Life of both is 8 years.
Option | A | B |
Purchase | 90,000 | 110,000 |
Salvage | 7,000 | 9,000 |
Annual Maintenance Cost | 6,000 | 5,400 |
Unit Costs | 35.50 | 28.90 |
a. What is the maximum annual volume that option A has the lowest cost ?
b. What is the best total ANNUAL cost at an annual volume of 4500 units per year?
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