Determine which copier the company should acquire

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Reference no: EM13882032

Xerox's iGenX high-speed commercial printers cost $1.5 billion to develop. The machines cost $500,000 to $750,000 depending on what options the client selects. Spectrum Imaging Systems is considering the purchase of a new printer based on recent contracts it received for printing weekly magazine and mail-out advertising materials. The operating costs and revenues generated are related to a large extent to the speed and other capabilities of the copier. Spectrum is considering the four machines shown below. The company uses a 3-year planning period and a MARR of 15% per year. Determine which copier the company should acquire on the basis of an incremental rate of return analysis.

Copier

Initial Investment, $

Operating Cost, $ per Year

Annual Revenue, $ per Year

Salvage Value, $

iGen-1

-500,000

-350,000

+450,000

+70,000

iGen-2

-600,000

-300,000

+460,000

+85,000

iGen-3

-650,000

-275,000

+480,000

+95,000

iGen-4

-750,000

-200,000

+510,000

+120,000

Reference no: EM13882032

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