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Category > Business & Finance Posted 31 May 2017 My Price 8.00

A small manufacturing firm is considering

A small manufacturing firm is considering purchasing a new machine to modernize one of its current production lines. Two types of machines are available on the market. The lives of machine A and machine B are four years and six years, respectively, but the firm does not expect to need the service of either machine for more than five years. The machines have the following expected receipts and disbursements:

ItemMachine AMachine BFirst cost$6,500$8,500Service life4 years6 yearsEstimated  salvage value$600$1,000Annual O&M costs$800$520Change oil filter  every other year$100NoneEngine overhaul$200$280 (every(every 3 years)4 years)

The firm always has another option: leasing a machine at $3,000 per year, fully maintained by the leasing company. After four years of use, the salvage value for machine B will remain at $1,000.

(a) How many decision alternatives are there?

(b) Which decision appears to be the best at i = 10%?

 

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Status NEW Posted 31 May 2017 04:05 AM My Price 8.00

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