be ts manufacturing process f machines that wouid be appropriate are presenay on

Question

be ts manufacturing process f machines that wouid be appropriate are presenay on the EVAD of s1 and PVARo market. The compay has determined the folowing (EVOf $1. PM Of $1. FVA C$1 PVA S1 FAD of Si and PVADt Esqulre Company needs to acquire a moiding machine to be used in i 1 (Use appropriate factoris) trem the tables provkded. Two typas s rom the tanilem Machine A could be purchased for $1 6,500. It l last 10 years with annual maintenance costs of $600 por year. Ater 10 years the machine can be sold for 51,650 Machine B could bo purchasod for $15,000. It also will last 10 yoars and will roquirc maimenance costs of $2,400 in year throo, 53,000 in ycarsix, and 53,500 In yearcight. Atter 10 ycars, the machine will have no salvags valuc. Required: Assu c an mc cs a c o 8% proporty renco 5 thc t?mc valuc c monc Round your tinal answers to nearest whole dollar amount.l this stuation and hat maintc ancccosts are paid att cend of cach mc ta cratons Negative amoun ts should be r indicated by ? min $ Sign. Do not round inte medate calculations. ntncy im n car gnore n con Calculate the present valuc ?t Machine A & Machine B Which mlar?nc Esqure should purchase? Machina A Machina B Eequra shouid purchas

Explanation / Answer

Esquire should purchase Machine A Statement showing Cash flows Machine A Particulars Time PVF 8% Amount PV Cash Outflows                          -                   1.0000                           16,500.00                           16,500.00 Cash Outflows 1-10                 6.7101                                 600.00                              4,026.05 Cash Outflows (Salvage Value)                 10.00                 0.4632                           (1,650.00)                               (764.27) Present value of Cash Outflows                           19,761.78 Statement showing Cash flows Machine B Particulars Time PVF 8% Amount PV Cash Outflows                          -                   1.0000                           15,000.00                           15,000.00 Cash Outflows                    3.00                 0.7938                              2,400.00                              1,905.20 Cash Outflows                    6.00                 0.6302                              3,000.00                              1,890.51 Cash Outflows                    8.00                 0.5403                              3,600.00                              1,944.97 Cash Outflows (Salvage Value)                 10.00                 0.4632                                           -                                             -   Present value of Cash Outflows                           20,740.67 Time PVF at 8%                                                                   1.00               0.9259                                                                   2.00               0.8573                                                                   3.00               0.7938                                                                   4.00               0.7350                                                                   5.00               0.6806                                                                   6.00               0.6302                                                                   7.00               0.5835                                                                   8.00               0.5403                                                                   9.00               0.5002                                                                 10.00               0.4632 PVF for 10 Years               6.7101

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