Which machine if any should the company select at a marr

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Reference no: EM13882051

Only one of four different machines can be purchased for Glass Act Products. An engineer performed the following analysis to select the best machine, all of which have a 10-year life. Which machine, if any, should the company select at a MARR of 22% per year?

 

1

2

3

4

Initial cost, $

-44,000

-60,000

-72,000

-98,000

Annual cost, $ per year

-70,000

-64,000

-61,000

-58,000

Annual savings,

+80,000

+80,000

+80,000

+82,000

$ per year





Overall ROR, %

18.6

23.4

23.1

20.8

Machines compared

2 to 1

3 to 2

4 to 3


Incremental

-16,000

-12,000

-26,000


investment, $





Incremental cash fl ow,

+6,000

+3,000

+5,000


$ per year





ROR on increment, %

35.7

21.4

14.1


Reference no: EM13882051

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