The manger in a canned food processing plant is tryng to decide between two labeling machines.
Machine (A) Machine (B)
First cost $15,000 $25,000
Maintenance and operating costs 1,600 400
Annual benefit 8,000 13,000
Salvage value 3,000 6,000
Useful life, in years 6 10
Assume an interest rate of 6%. Use cash flow analysis to determine which machine should be chosen.