A company is considering two investment alternatives.
Alternative A is a new machine that costs $50,000 and will last for ten years with no salvage value. It will save the company $8423 per year and the savings will increase by $2120 each year.
Alternative B is a is a machine that will cost $75,000 and last 10 years. The salvage value at the end of 10 years is $25,000. It will save $10292 per year.
Find the present worth of each alternative if the company as a MARR of 10.5%/year.
Alternative A $
Alternative B $
(On the test you must be able to tell me that you would select the one with the higher present value.)