Determine whether the farmer should purchase the machine

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Reference no: EM131308015

A farmer in Mobile decides to purchase a machine that converts manure into biogas. He has 100 cows that create a total of 40 lb of manure every day, 365 days per year. Each pound of manure can be used to produce 1 ft^3 of biogas which can be sold for $1.25. The machine costs $245,000 and is expected to last 12 years, after which the farmer can sell it for $2,000. The farmer's interest rate is 8%. Using an annual worth analysis, determine whether the farmer should purchase the machine.

Reference no: EM131308015

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