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Mountain Pass Canning Company has determined that any one of five machines can be used in one phase of its canning operation. The costs of the machines are estimated below, and all machines have a 5-year life. If the minimum attractive rate of return is20% per year, determine the one machine that should be selected on the basis of a rate of return analysis.
Annual Operating Machine First Cost, $ Cost, $/year Salvage Value1 -31,000 -18,000 54002 -28,000 -19,500 53003 -34,500 -17,000 10004 -48,000 -12,000 05 -41,000 -15,500 2200
A) Select Machine 1B) Select Machine 2C) Select Machine 3D) Select Machine 4
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