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You currently operate a machine which has an annual operating cost of $6000. You are given some choices for replacement as listed in the table

You currently operate a machine which has an annual operating cost of $6000. You are given some choices for replacement as listed in the table below. The table shows the cost data. The planning horizon is 10 years. Which is the best one to select and why?(interest rate=6%)

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. B 25000 8000 5 2000 40000 4000 Initial cost Annual cost Service Life Salvage value 70000 2000 7 6 3000 4000

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