Donot use excel show all work step by step... (1) ABC Co. is planning to purchas

Question

Donot use excel show all work step by step...

(1) ABC Co. is planning to purchase a CNC machine. The engineering team approved 3 models. All models have the required specifications. The following table summarizes information which is associated with three machines considered for purchasing. Assume ABC Co. can replace the CNC machine at the end of the useful life with the exact same machine and the same price. Note that M&O; stands for Maintenance & Operation Cost. The company's interest rate (MARR) is 10%. Which CNC machine should the company choose? Use Annual Cash Flow Analysis to answer the question Solve the problem using compounding factors. Show all required compounding factors (XX, i%, n) Round the answer to zero decimal place. Excel solution is NOT accepte d. Useful Life (Years) First Cost Salvage Value Annual Benefit M&O; in year 1 M&O; annual increase 13 S1,800,000 180,000 535,000 85,000 12,000 $2,180,000 170,000 650,000 82,000 11,000 S3.200,000 250,000 650,000 75,000 10,000

Explanation / Answer

Statement showing Annual worth

For A

For B

For C

Thus project B should be selected

Particulars 0 1 2 3 4 5 6 7 8 9 10 11 12 13 Total First cost -1800000 Annual benefits 535000 535000 535000 535000 535000 535000 535000 535000 535000 535000 535000 535000 535000 M&O -85000 -97000 -109000 -121000 -133000 -145000 -157000 -169000 -181000 -193000 -205000 -217000 -229000 Salvage value 180000 Total cash flow -1800000 450000 438000 426000 414000 402000 390000 378000 366000 354000 342000 330000 318000 486000 PVIF @ 10% 1 0.9091 0.8264 0.7513 0.6830 0.6209 0.5645 0.5132 0.4665 0.4241 0.3855 0.3505 0.3186 0.2897 Present value -1800000 409090.9 361983.5 320060.1 282767.6 249610.4 220144.8 193973.8 170741.7 150130.6 131855.8 115663 101324.6 140776.9 1048124 PVIFA(10%,13years) 7.1034 Equivalent annual cost 147552.4

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