Question

for the below two machines and based on AW analysis which machine we should select? MARR=10%.

	Machine A	Machine B
First cost, $	28,321	100,000
Annual cost, $/year	11,988	7,000
Salvage value, $	5,755	-
Life, years	3	infinite

Answer the below question:

A- the AW for machine A=

For the below two machines and based on AW analysis which machine we should select? MARR=10%

	Machine A	Machine B
First cost, $	25,866	115,900
Annual cost, $/year	13,724	8,637
Salvage value, $	6,348	-
Life, years	3	infinite

Answer the below question:

B- the AW for machine B=

C- Based on the AW value you got in the previous 2 questions, which machine we should select? type you an explanation below

Answer 1

1. Calculating the AW of the two machines at a rate of 10%

Now, calculating the annual worth of machine B.

The annual worth(cost) of machine A is greater than the AW(cost) of machine B. Thus, select machine B.

2. Calculating the AW of the two machines

AW(A) = - $ 23,293.08

Now calculating AW of machine B

AW (B) = - 115,900 × 0.1 - 8,637 = - $ 20,227

Select machine B.

C. In first case select machine B

On second basis of the AW select machine B.