Two machines are being considered for the same task compare


Two machines are being considered for the same task. Machine A costs $18000 new and is estimated to last 6 years. The cost to replace machine A will be 4 percent more each year than it was the year before It will cost $1200 per year to operate and maintain machine A. It will have a trade-in (salvage) value of $1500. Machine B costs $38000 to buy, will last 12 years and will have a trade in value of $2000. The cost of operation and maintenance for Machine B is $700 per year. Compare the two option based on a present worth analysis. Include a cash flow diagram for each option and assume all interest rates are 8% per year.

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Operation Management: Two machines are being considered for the same task compare
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