Show detail of your set up data, Formula, calculation, and Box your answer for e

Question

Show detail of your set up data, Formula, calculation, and Box your answer for each problem 1.Dunn Manufacturing is considering the following two alternatives. The cost information for the two proposals for replacing an equipment are provided are in table below. 25 points noo Machine X achine Y 120,000 ial cost 96,000 nefits/year $12,000 per year for 20 years. $$20,000 for the first 10 years and $9,000 for the next 10 ears 20 years Salvage value $20,000 0,000 ARR 10% a) The NPW of machine Xis Show Detail of your Calculation Show Detail of your Calculation b) The NPW of machine Y is c) Which Equipment do you recommend?

Explanation / Answer

a) NPW of machine X = -96,000 + 12,000(P/A, 10%, 20) + 20,000(P/F, 10%, 20)

                                   = -96,000 + 12,000(8.5136) + 20,000(0.1486)

                                  = -96,000 + 102,163.2 + 2,972

                                  = $9,135.2

b) NPW of machine Y = -120,000 + 9,000(P/A, 10%, 20) + 11,000(P/A, 10%, 10) + 40,000(P/F, 10%, 20)

                                   = -120,000 + 9,000(8.5136) + 11,000(6.1446) + 40,000(0.1486)

                                  = -120,000 + 76,622.4 + 67,590.6 + 5,944

                                  = $30,157

c) Since NPW of machine Y is more than machine X, therefore, machine Y is recomended.

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