You have been assigned to purchase a new molding machine. One vendor offered a m

Question

You have been assigned to purchase a new molding machine. One vendor offered a machine that will cost $200,000, with an estimated installation cost of $10,000. The machine has an expected life of 10 years, with an annual operating cost of $10,000. At the end of the machine life, there is an expected salvage value of $5000 Your estimation shows an expected $45,000 of revenues directly related to the new machine during the first year, which is expected to increase by $2,000/year till the end of the machine

Explanation / Answer

Particular/Year 0 1 2 3 4 5 6 7 8 9 10 Initial Investment(A) 200000 Installation Cost(B) 10000 Salvage Value

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