Which machine tim should recommend

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Reference no: EM131361320

Question -

Tim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table. He is told to assume that:

1. The life of each machine is 3 years.

2. The company thinks it knows how to make 12% on investments no more risky than this one.

3. Labor and maintenance are paid at the end of the year.

	Machine A	Machine B
Original cost	$10,000	$20,000
Labor per year	2,000	4,000
Maintenance per year	4,000	1,000
Salvage value	2,000	7,000

Determine, via the present value method, which machine Tim should recommend.

Reference no: EM131361320

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