A company is considering purchasing a new CNC machine. The study period is 10 years and the MARR is 15% per year. There are two options being considered with the following data:

Alternatives

A B

Initial cost $100,000 $160,000

Annual Expenses $30,000 $20,000

One-time expense at the end of 5 years $20,000

Market value at the end of 10 Years $10,000 $15,000

Using the Annual Worth method, determine which alternative should be selected?

Using the Internal rate of return method, which alternative should be selected?

Question

A company is considering purchasing a new CNC machine. The study period is 10 years and the MARR is 15% per year. There are two options being considered with the following data:

Alternatives

A B

Initial cost $100,000 $160,000

Annual Expenses $30,000 $20,000

One-time expense at the end of 5 years $20,000

Market value at the end of 10 Years $10,000 $15,000

Using the Annual Worth method, determine which alternative should be selected?

Using the Internal rate of return method, which alternative should be selected?

	A	B	C
Cost	$10,000	$15,000	$20,000
Annual Benefit	$1,000	$1,762	$5,548
Useful Years	Infinity	20	5

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