Question

This is an engineering economics proboem. Please help! Due at midnight for me

Homework: Chapter 7 Homework Save Score: 0.33 of 1 pt 3 of 5 (5 complete) HW Score: 86.67%, 4.33 of 5 pts Problem 7-41 (algorithmic) Question Help * Two alternative machines will produce the same product, but one is capable of higher-quality work, which can be expected to return greater revenue. The following are relevant data. Determine which is the better alternative, assuming repeatability and using SL depreciation, an income-tax rate of 35%, and an after-tax MARR of 12% Capital investment Life Terminal BV (and MV) Annual receipts Annual expenses Machine A $20,000 11 years $5,000 $154,000 $146,000 Machine EB $34,000 8 years $2,000 $179,000 $162,000 Click the icon to view the interest and annuity table or discrete compounding when the MAR is 12% per year Calculate the AW value for the Machine A. AWA (1296) = $? (Round to the nearest dollar)

Answer 1

For Project A

Initial Cost = $20000

Annual Profit = $8000

Salvage Value = 5000

Life = 11 years

Rate = 12%

AW = -{Initial Cost - salvage cost }*(A/P, 12%, 11) - Salvage Value * interest + Annual Profit

= -{20000 -5000}* 0.12/{1-1/1.12^11} - 5000 *0.12 + 8000

= -15000*0.1684 - 600 + 8000

= 4874