The following costs are associated with three tomato-peeling machines being cons

Question

The following costs are associated with three tomato-peeling machines being considered for the use in a canning plant If the canning company uses an interest rate                of 12%., which is the best alternative?USE NPW to TO MAKE YOUR DECISION. (Note: Consider the least common multiple as the study period.)  SHOW YOUR WORK

                Machine                         A          B            C

                First cost                $52,000   $63,000  $67,000
                Maintenance costs 15,000    9,000    12,000
                Annual benefit         38,000  31,000  37,000
                Salvage value          13,000  19,000  22,000
                Useful life in years        4          6        12

Explanation / Answer

npv for ABC respectively is $131,637.03 $93,128.12 $117,341.90
hence A is best

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