A small manufacturing firm is considering purchasing a

new boring #4913

A small manufacturing firm is considering purchasing a new boring machine to modernize one
of its production lines. Two types of boring machines are available on the market. The lives of
machine A and machine B are eight years and 10 years, respectively. The machines have the
following receipts and disbursements:Use a MARR (after tax) of 10% and a marginal tax rate of
30%, and answer the following questions.(a) Which machine would be most economical to
purchase under an infinite planning horizon? Explain any assumption that you need to make
about future alternatives.(b) Determine the break-even annual O&M costs for machine A so that
the annual equivalent cost of machine A is the same as that of machine B.(c) Suppose that the
required service life of the machine is only five years. The salvage values at the end of the
required service period are estimated to be $3,000 for machine A and $3,500 for machine B.
Which machine is more economical?View Solution:
A small manufacturing firm is considering purchasing a new boring

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