Use IRR and incremental analysis

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Reference no: EM13795872

Rotor Turbine Engine Company needs a new automated gear production machine. It has two bids with associated estimated data:

Company A, Company B

Initial Cost: $85,000, $110,000

Estimated end of the year net income for:

Year 1: $45,000, $61,000

Year 2: $40,000, $53,000

Year 3 $30,000, $44,000

Estimated salvage value: $15,000, $ 21,000

Use IRR and incremental analysis to determine which company to recommend, if any, given an MARR of 12% per year compounded annually. Note: Show the cash flow diagram and the NPW equation use your calculator or Excel to determine IRR.

Reference no: EM13795872

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