You are exploring 2 different machines to replace the current, outdated ones currently in use on your production floor (and have been used for 50 years previously). Each of the 2 machines are predicted to have slightly different benefits and costs associated with them. From your research you have been able to collect the following information and projections.

	Machine A	Machine B
Initial Cost	162000	187000
Installation	25000	38000
Annual savings	55000	69300
Annual maintenance costs	1050 in year 1, increasing 10% in each year following	800
Direct Labour Savings	12000	15000
Salvage Value	85000	75000
Service life	3	4

a) Your boss asked you to perform a present value analysis on each of the options for a single service life cycle if i=10%. What values do you get for each option? (4 points, 2 for each PV of lifecycle)

b) Is this a reasonable way to compare these 2 machines? Explain your why or why not what approach you would recommend for a better comparison (2 points), then complete that method of analysis for both machines. You can assume that these machines would be needed for at least the next 20 years (4 points)

c) Based on your calculations above, do you choose either of these machines? Explain your reasoning, and any other information that you would want to make a decision. (2 points)