A company is deciding to replace major piece of machinery. Three potential alternatives have been identified. The cost a

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A Company Is Deciding To Replace Major Piece Of Machinery Three Potential Alternatives Have Been Identified The Cost A 1 (58.94 KiB) Viewed 10 times

A company is deciding to replace major piece of machinery. Three potential alternatives have been identified. The cost and benefit information for both alternatives are shown below. Assume 15% interest and determine the following: Item First Cost Uniform Annual Benefit Salvage Value Useful Life in Years Machine 1 $52.750 $25,750 a. Machine 1 b. Machine 2 c. Machine 3 d. Machine 4 $750 3 Machine 2 $98.000 $32.750 $1,250 5 Machine 3 $169,750 $32,500 $17.500 15 Machine 4 $150.000 $38,000 $5,800 7.5 What is the most appropriate Analysis Period? a. 3 years b. 3 years for Machine 1; 5 years for Machine 2; 15 years for Machine 3; and 7.5 years for Machine 4 c. The average of the useful lives of the different alternatives, in this case, 7.63 years d. 15 years Which Alternative has the highest Salvage Value in today's dollars? Based solely on financial considerations, which is the best alternative (Hint: NPV)? a. Machine 1 b. Machine 2 c. Machine 3 d. Machine 4