You require a new machine for 20 years machine a lasts 5, Ask an Expert

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You require a new machine for 20 years. Machine A lasts 5 years and Machine B lasts 4 years. Machine A costs $13,000 and Machine B costs $11,000. The salvage value of Machine A is $3,000 and the salvage value of Machine B is $4,000. Annual O&M costs for Machine A are $1,700; and are $1,500 for Machine B. Both machines can be purchased in the future at the same price as today, and their salvage values and annual costs will remain as they are now. Your MARR is 10% annual rate.

Which Machine should be purchased and why? Show all work.

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Financial Management, Finance

Category:- Financial Management
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