Which of the two machines to install to reduce costs

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Reference no: EM131537059

A firm is considering which of the two machines to install to reduce costs. Both devices have useful lives of 5 years, and no salvage value. Device A costs $10,000 and can be expected to result in $3,000 savings annually. Device B costs $13, 500 and will provide cost savings of $3,000 the first year but will increase $500 annually, making the second year savings $3, 500., the third year savings $4,000, and so forth. For a 7% MARR which device should the firm purchase? USE a PW ROR analysis. Use interpolation by hand to find the exact value of i*.

Reference no: EM131537059

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