As a temporary measure, a brewing company is deciding between two used filling machines: the Kram and the Zanni. a. The Kram filler has an initial cost of $85,000; the estimated annual maintenance is $8000. b. The Zanni filler has a purchase price of $42,000, with annual maintenance costs of $8000. The Kram filler has a higher efficiency than the Zanni, and it is expected that savings would amount to $4000 per year if the Kram filler were installed. The filling machine will not be needed after 5 years, and at that time, the salvage value for the Kram filler would be $25,000, while the Zanni would have little or no value. Assuming a MARR of 10%, which filling machine should be purchased?
As a temporary measure, a brewing company is deciding between two used filling machines: the Kram and the Zanni. a. The Kram filler has an initial cost of $85,000; the estimated annual maintenance is $8000. b. The Zanni filler has a purchase price of $42,000, with annual maintenance costs of $8000. The Kram filler has a higher efficiency than the Zanni, and it is expected that savings would amount to $4000 per year if the Kram filler were installed. The filling machine will not be needed after 5 years, and at that time, the salvage value for the Kram filler would be $25,000, while the Zanni would have little or no value. Assuming a MARR of 10%, which filling machine should be purchased?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 18P: Filkins Fabric Company is considering the replacement of its old, fully depreciated knitting...
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As a temporary measure, a brewing company is deciding between two used filling machines: the Kram and the Zanni. a. The Kram filler has an initial cost of $85,000; the estimated annual maintenance is $8000. b. The Zanni filler has a purchase price of $42,000, with annual maintenance costs of $8000. The Kram filler has a higher efficiency than the Zanni, and it is expected that savings would amount to $4000 per year if the Kram filler were installed. The filling machine will not be needed after 5 years, and at that time, the salvage value for the Kram filler would be $25,000, while the Zanni would have little or no value. Assuming a MARR of 10%, which filling machine should be purchased?
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