A company must install one of two systems to reduce costs. …
A company must install one of two systems to reduce costs. Both systems have useful lives of 5 years and no salvage value. The cash flows are summarized below. Year System A NCF, $ System C NCF, $ 0 −10,000 −13,500 1 3,000 3,000 2 3,000 3,500 3 3,000 4,000 4 3,000 4,500 5 3,000 5,000 IRR 15.2% 13.4% Assume the firm’s MARR is 12%. Which project should be selected on the basis of the IRR criterion? [which]
Read DetailsA process engineer needs to purchase a welding machine for a…
A process engineer needs to purchase a welding machine for a new production line. The machine costs $41,000 now, has a maintenance cost of $6,000 per year, and will last 7 years. Any time after year 5 the machine will have a salvage value of $7,000. The effective interest rate is 6% per year. What is the capital recovery cost of the machine?
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