Minimum Attractive Rate of Return:
Use Present Worth analysis and determine which of the following two machines should be selected based on their incremental cash flows and a minimum attractive rate of return (MARR) of 11% per year. Compute the actual rate of return to within plus or minus 0.1% using Microsoft EXCEL.
|
Item
|
Machine A
|
Machine B
|
|
First cost, $
|
-43,000
|
-65,000
|
|
Annual operating cost, $/year
|
-14,500
|
-9,000
|
|
Salvage value, $
|
10,500
|
17,000
|
|
Life, years
|
5
|
10
|