Question

QUESTION 3

1. For the below ME alternatives , which machine should be selected based on the PW analysis. MARR=10%

   	Machine A	Machine B	Machine C
   First cost, $	16,122	30000	10000
   Annual cost, $/year	8,601	6,000	4,000
   Salvage value, $	4,000	5,000	1,000
   Life, years	3	6	2

   Answer the below questions :

   A- PW for machine A=

QUESTION 4

1. For the below ME alternatives , which machine should be selected based on the PW analysis. MARR=10%

   	Machine A	Machine B	Machine C
   First cost, $	15000	25,846	10000
   Annual cost, $/year	9,857	6,000	4,000
   Salvage value, $	4,000	5,000	1,000
   Life, years	3	6	2

   Answer the below questions :

   B- PW for machine B=

QUESTION 5

1. For the below ME alternatives, which machine should be selected based on the PW analysis. MARR=10%.

   	Machine A	Machine B	Machine C
   First cost, $	15000	30000	12,631
   Annual cost, $/year	18,241	6,000	4,000
   Salvage value, $	4,000	5,000	1,000
   Life, years	3	6	2

   Answer the below questions :

   C- PW for machine C =

Answer 1

Present worth = -P+(A_R-A_m)( P/A,i%,n)-+F(P/F,i%,n)
where, P is the initial cost, A_R is the annual revenue, A_m is the annual maintenance cost and F is the salvage value

3) Present worth of machine A = -16,122+(0-8,601)(P/A,10%,3)+4,000(P/F,10%,3)
= -16,122+(0-8,601)(2.487)+4,000(.7513) = $-34,507.49
4) Present worth of machine B = -25,846+(0-6,000)(P/A,10%,6)+5,000(P/F,10%,6)
= -25,846+(0-6,000)(4.355)+5,000(.5645)= $-49,153.5
5) Present worth of machine C = -12,631+(0-4,000)(P/A,10%,2)+1,000(P/F,10%,2)
= -12,631+(0-4,000)(1.736)+1,000(.8264)= $-18,748.6