Question

5. Machine X costs $10K with annual maintenance costs of $500/year and no salvage value at...

5.

Machine X costs $10K with annual maintenance costs of $500/year and no salvage value at end of 4 year useful life.

Machine Y costs $20K with no maintenance cost the first year, $100 the 2nd year, increasing by $100 each year. Salvage value of $5K at end of 12 year useful life.

Determine the present value (cost) of each system

Assume 8% interest

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Answer #1

Answer - Present value of Machine X = -$11656.06

Present value of machine Y = -$21477.97

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