A company is going to buy a new machine for manufacturing its products. Five machines are available. Data is as follows: A B C D E First Cost 25,200 31,800 38,500 46,600 52,500 Power per year 1,300 1,450 2,600 2,300 2,300 Labor per year 10,500 9,200 6,200 3,900 2,350 Maintenance per year 2,800 1,800 1,400 1,300 850 Taxes per year 3% 3% 3% 3% 3% Life, years 5 5 5 5 5 If money is worth 15% before taxes to the company, which machine should be chosen? Use Annual Cost Method

A company is going to buy a new machine for manufacturing its products. Five machines are available. Data is as follows: A B C D E First Cost 25,200 31,800 38,500 46,600 52,500 Power per year 1,300 1,450 2,600 2,300 2,300 Labor per year 10,500 9,200 6,200 3,900 2,350 Maintenance per year 2,800 1,800 1,400 1,300 850 Taxes per year 3% 3% 3% 3% 3% Life, years 5 5 5 5 5 If money is worth 15% before taxes to the company, which machine should be chosen? Use Annual Cost Method

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 10E

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	A	B	C	D	E
First Cost	25,200	31,800	38,500	46,600	52,500
Power per year	1,300	1,450	2,600	2,300	2,300
Labor per year	10,500	9,200	6,200	3,900	2,350
Maintenance per year	2,800	1,800	1,400	1,300	850
Taxes per year	3%	3%	3%	3%	3%
Life, years	5	5	5	5	5