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You have two machines under consideration for an improved automated wrapping process for Snickers Fun Size candy bars as deta

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Answer #1

NPV calculation for the two machine are given below:

Α 1 Year mto Present Value of Cash Flow Present Value of Cash Flow Machine C Cash flow (Cash flow/1.12^year) Machine D Cash f

Now, NPV for C is 61900.51 and for D is 113565.01

Below is the calculation of EAC (Equivalent Annual Cost) calculation for the 2 machine is given below:

G н 3 Nper rate Machine C Machine D 6 12% 12% (61,900.51)! (113,565.01) |=PMT(H3,H2,H4,0,0) PMT(rate, nper, pv, [fv], [type])

G H Nper rate PV PMT Machine C Machine D 30 6! 12% 12% (61,900.51)| (113,565.01)| $25,772.21 |=PMT(13,12,14,0,0) PMT(rate, np

Machine C Machine D Nper 3 6 rate PV PMT 12% (61,900.51) $25,772.21 12% (113,565.01) $27,621.93

As the EAC of Machine C is $25772.21 is lesser than Machine D which is $27621.93,

Machine C is selected for an improved automated wrapping process.

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