Question

Two machines, A and B, which perform the same functions, have the following costs and lives....

Two machines, A and B, which perform the same functions, have the following costs and lives.
Type Initial cost Annual maintainence cost Life
A 6200 500 5
B 6700 650 7
The two machines are mutually exclusive and the cost of capital is 10 percent.
Which machine would you choose?

                          

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
M Digem Mines must choose between two alternative machines A and B which perform the same...
M Digem Mines must choose between two alternative machines A and B which perform the same function, but which have lives of 2 and 4 years, respectively. The initial cost of machine A is $30,000 and its annual operating costs are expected to be $6,000. The initial cost of machine B is $42,000 and its annual operating costs are expected to be $9,000. Assume that the projects are repeatable and there are no constraints on the availability of funds. Digem...
Your company is considering buying one of the two machines into product line. These two machines...
Your company is considering buying one of the two machines into product line. These two machines have different initial costs, annual operating costs, and different length of lives as following. Machine A: Initial costs of $20,000; annual costs of $2,000 for 5 years Machine B: Initial costs of $30,000; annual costs of $1,000 for 8 years The cost of capital is 10%. What are their equivalent annual costs (EACs)? If you want to have lower average annual cost, which machine...
Firm BCD has the opportunity to invest in one of two mutually exclusive machines, which can...
Firm BCD has the opportunity to invest in one of two mutually exclusive machines, which can both produce the same product. Machine A has a life of 9 years, costs $12 million and will produce after-tax inflows of $2.5 million per year at the end of each year. Machine B has a life of 7 years, costs $15 million and will produce after-tax inflows of $3.5 million per year at the end of each year. Assuming that the machines can...
The Borstal Company has to choose between two machines that do the same job but have...
The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A Machine B 0 $48,500 $58,500 1 11,700 11,400 2 11,700 11,400 3 11,700 + replace 11,400 4 11,400 + replace These costs are expressed in real terms. a. Suppose you are Borstal’s financial manager. If you had to buy one or the other machine and rent it to the production manager for...
The Borstal Company has to choose between two machines that do the same job but have...
The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A Machine B 0 $47,000 $57,000 1 11,400 10,800 2 11,400 10,800 3 11,400 + replace 10,800 4 10,800 + replace These costs are expressed in real terms. 1. Suppose you are Borstal’s financial manager. If you had to buy one or the other machine and rent it to the production manager for...
\$250,000 You are considering two machines A B that can be used for the same purpose...
\$250,000 You are considering two machines A B that can be used for the same purpose . Machine A costs will reduce costs by $ 70,000 per year , needs networking capital of $ 20,000 at time zero which be released at the end of the project , has a 5 year straight line depreciable life and can be sold at the end of the project's life for $ 50,000 . Machine B costs $ 320,000 will reduce costs by...
Two different machines, A and B, are used to perform the same task in an industry....
Two different machines, A and B, are used to perform the same task in an industry. It is suspected that machine A has an average time to perform the task greater than machine B. To verify this suspicion, a random sample of 35 times from machine A and 32 times from machine B was collected, and the results found were: Machine Average Standard Deviation A 28,87 1,05 B 27,89 1,85 (a) What does the data allow to conclude about the...
The Borstal Company has to choose between two machines that do the same job but have...
The Borstal Company has to choose between two machines that do the same job but have different lives. The two machines have the following costs: Year Machine A Machine B 0 $42,500 $52,500 1 10,500 9,000 2 10,500 9,000 3 10,500 + replace 9,000 4 9,000 + replace These costs are expressed in real terms. a. Suppose you are Borstal’s financial manager. If you had to buy one or the other machine and rent it to the production manager for...
"A company is considering two types of machines for a manufacturing process. Machine A has an...
"A company is considering two types of machines for a manufacturing process. Machine A has an immediate cost of $87,000, and its salvage value at the end of 8 years of service life is $29,000. The operating costs of this machine are estimated to be $5700 per year. Extra income taxes are estimated at $1500 per year. Machine B has an immediate cost of $44,000, and its salvage value at the end of 8 years' service is neglible. The annual...
"A company is considering two types of machines for a manufacturing process. Machine A has an...
"A company is considering two types of machines for a manufacturing process. Machine A has an immediate cost of $61,000, and its salvage value at the end of 4 years of service life is $14,000. The operating costs of this machine are estimated to be $3900 per year. Extra income taxes are estimated at $1800 per year. Machine B has an immediate cost of $45,000, and its salvage value at the end of 4 years' service is neglible. The annual...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT