Three alternatives have the following cost data associated with them:

Data Alt.1 Alt.2 Alt.3

Useful Life Years 10 10 10

First Cost $1,325,000 $1,980,000 $1,650,000

Annual Benefit 265,000 589,000 435,000

Annual M&O Costs 95,000 97,000 91,000   

Annual M&O gradient 2,300 2,100 1,980

Salvage value 145,000 205,000 178,000

Loan Payment X Y Z

The loan payments are calculated using an interest rate of 10%, a life equal to the life of the machine, and a down payment of 20%. Use MARR of 12% and determine which machine, if any should be purchased.