The manager of a canned food processing plant must decide between two different labeling machines. The estimated cash flows are shown in Table below. Which one should be selected on the basis of Present Worth (PW) analysis at 10% per year? Machine A Machine B First cost, $ - 42,000 - 51,000 Annual operating - 28,000 - 17,000 cost, $ 10% of initial Salvage value, $ 10% of initial cost cost Life, years 4 4 10% 10% TABLE 15 Discrete Cash Flow: Compound Interest Factors Uniform Series Payments Arithmetic Gradients Single Payments Capital Recovery A/P Gradient Present Worth P/G Gradient Uniform Series A/G Compound Present Compound Amount Present Worth Sinking Fund Amount Worth P/F A/F F/A P/A F/P 1.1000 0.9091. 1.00000 1.0000 1.10000 0.9091 0.4762 0.47619 2.1000 0.57619 1.7355 0.8264 1.2100 0.8264 0.9366 3.3100 0.40211 2.4869 2.3291 1.3310 0.7513 0.30211 1.3812 0.31547 3.1699 4.3781 1.4641 0.6830 0.21547 4.6410 1.8101 4. 6.8618 9.6842 12.7631 3.7908 0.16380 0.12961 6.1051 7.7156 • 0.26380 0.22961 .5 1.6105 0.6209 4.3553 .2.2236 1.7716 0.5645 2.6216 6. 9.4872 0.20541 4.8684 0.10541 3.0045 3.3724 1.9487 0.5132 16.0287 19.4215 11.4359 0.18744 5.3349 0.4665 0.08744 2.1436 2.3579 8 0.17364 5.7590 0.4241 0.07364 13.5795 22.8913 3.7255 6.1446 0.06275 15.9374 0.16275 2.5937 0.3855 10
The manager of a canned food processing plant must decide between two different labeling machines. The estimated cash flows are shown in Table below. Which one should be selected on the basis of Present Worth (PW) analysis at 10% per year? Machine A Machine B First cost, $ - 42,000 - 51,000 Annual operating - 28,000 - 17,000 cost, $ 10% of initial Salvage value, $ 10% of initial cost cost Life, years 4 4 10% 10% TABLE 15 Discrete Cash Flow: Compound Interest Factors Uniform Series Payments Arithmetic Gradients Single Payments Capital Recovery A/P Gradient Present Worth P/G Gradient Uniform Series A/G Compound Present Compound Amount Present Worth Sinking Fund Amount Worth P/F A/F F/A P/A F/P 1.1000 0.9091. 1.00000 1.0000 1.10000 0.9091 0.4762 0.47619 2.1000 0.57619 1.7355 0.8264 1.2100 0.8264 0.9366 3.3100 0.40211 2.4869 2.3291 1.3310 0.7513 0.30211 1.3812 0.31547 3.1699 4.3781 1.4641 0.6830 0.21547 4.6410 1.8101 4. 6.8618 9.6842 12.7631 3.7908 0.16380 0.12961 6.1051 7.7156 • 0.26380 0.22961 .5 1.6105 0.6209 4.3553 .2.2236 1.7716 0.5645 2.6216 6. 9.4872 0.20541 4.8684 0.10541 3.0045 3.3724 1.9487 0.5132 16.0287 19.4215 11.4359 0.18744 5.3349 0.4665 0.08744 2.1436 2.3579 8 0.17364 5.7590 0.4241 0.07364 13.5795 22.8913 3.7255 6.1446 0.06275 15.9374 0.16275 2.5937 0.3855 10
Chapter11: Cash Flow Estimation And Risk Analysis
Section: Chapter Questions
Problem 2STP
Related questions
Question
Transcribed Image Text:The manager of a canned food processing plant must decide between two different labeling
machines. The estimated cash flows are shown in Table below. Which one should be selected
on the basis of Present Worth (PW) analysis at 10% per year?
Machine A
Machine B
First cost, $
- 42,000
- 51,000
Annual operating
- 28,000
- 17,000
cost, $
10% of initial
Salvage value, $
10% of initial cost
cost
Life, years
4
4
10%
10%
TABLE 15
Discrete Cash Flow: Compound Interest Factors
Single Payments
Uniform Series Payments
Arithmetic Gradients
Gradient
Uniform Series
Gradient
Capital
Recovery
A/P
Present
Sinking
Fund
Compound
Amount
Compound
Present
Worth
Present Worth
Amount
Worth
P/A
P/G
A/G
F/P
P/F
A/F
F/A
1.0000
1.10000
0.9091
1.1000
0.9091,
1.00000
0.4762
2.1000
0.57619
1.7355
0.8264
1.2100
0.8264
0.47619
0.9366
0.40211
2.4869
2.3291
3
1.3310
0.7513
0.30211
3.3100
1.3812
0.31547
3.1699
4.3781
1.4641
0.6830
0.21547
4.6410
1.8101
4.
0.26380
3.7908
6.8618
1.6105
0.6209
0.16380
6.1051
9.6842
2.2236
.5
7.7156
0.22961
4.3553
1.7716
0.5645
0.12961
12.7631
2.6216
9.4872
0.20541
4.8684
7.
1.9487
0.5132
0.10541
16.0287
3.0045
11.4359
0.18744
5.3349
0.08744
3.3724
0.4665
0.4241
8.
2.1436
5.7590
19.4215
0.07364
13.5795
0.17364
3.7255
9.
2.3579
6.1446
22.8913
0.06275
15.9374
0.16275
2.5937
0.3855
10
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