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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Only one of four different machines can be purchased for Glass Act Products. An engineer performed the following analysis to select the best machine, all of which have a 10-year life. Which machine, if any, should the company select at a MARR of 22% per year?
|
 |
1 |
2 |
3 |
4 |
|
Initial cost, $ |
-44,000 |
-60,000 |
-72,000 |
-98,000 |
|
Annual cost, $ per year |
-70,000 |
-64,000 |
-61,000 |
-58,000 |
|
Annual savings, |
+80,000 |
+80,000 |
+80,000 |
+82,000 |
|
$ per year |
 |
 |
 |
 |
|
Overall ROR, % |
18.6 |
23.4 |
23.1 |
20.8 |
|
 |
 |
 |
 |
 |
|
Machines compared |
2 to 1 |
3 to 2 |
4 to 3 |
 |
|
Incremental |
-16,000 |
-12,000 |
-26,000 |
 |
|
investment, $ |
 |
 |
 |
 |
|
Incremental cash fl ow, |
+6,000 |
+3,000 |
+5,000 |
 |
|
$ per year |
 |
 |
 |
 |
|
ROR on increment, % |
35.7 |
21.4 |
14.1 |
 |
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