Question

For the below Me alternatives, which machine should be selected based on the future worth analysis. MARR-10% First costs Annual cost, s/year Salvage value, $ Life, years Machine A Machine B 15000 36,202 10000 4,808 4,000 5,000 Machine C 10000 4,000 1,000 Answer the below questions: B. Future worth for machine B, FW B-

Answer 1

First Cost = 36,302

Annual Cost = 4,808

Salvage = 5,000

Life = 6 years

MARR = 10%

Future value of first cost = 36,302 * 1.1^⁶ = 64,311.20

Future value of annual cost in the below table is calculated as: [Annual Cost * (1 + MARR)^^Year]

Year	Annual Cost	Money could be invested for years	Future Value
1	4,808	5	7,743.33
2	4,808	4	7,039.39
3	4,808	3	6,399.45
4	4,808	2	5,817.68
5	4,808	1	5,288.80
6	4,808	0	4,808.00
			37,096.65

Future value of machine B would be = - (Future value of first cost + Future value of annual cost) + Salvage Value

Future value of machine B = -(64,311.20 + 37,096.65) + 5,000 = -96,407.85