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Two alternatives for purchasing a new printing machine (from provider's A and B) are being considered for a production upgrade of a printing facility. Alternative A has a life of 2 years, first cost of $1200, annual reduction in maintenance cost (can be treated as income) of $600, and salvage value after 2 years of $200. Alternative B has a life of 3 years, first cost of $1500, annual reduction in maintenance cost of $600, and salvage value after 3 years of $250. MARR = 10%. Alternatives are replicable within 12 years. Using an appropriate method of analysis, choose the better alternative. Show calculation steps leading to this choice and provide explanations whenever possible.

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Financial Management, Finance

Category:- Financial Management
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