The following costs are associated with three tomato-peeling machines being considered for use in a canning plant

Question:

Machine Machine Machine

A B C'

First cost $52.000 $63,000 $ 67,00

Maintenance and $15.000 $9,000 $12.000

operating costs

Annual benefit $38,000 $31.000 $37,000

Salvage value $13,000 $19,000 $22,000

Useful life, 4 6 1 2

in years

If the canning company uses an interest rate of 12% which is the best alternative Use NPW to make your decision. (Note: Consider the least common multiple as the study period.)

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...