Two Flash Vaporizer Machines Are Considered for the Upgrade of Biodiesel

Essay

Two flash vaporizer machines are considered for the upgrade of biodiesel production. An engineer is asked to perform analyses to select the best machine. He prepares the following information for the evaluation. Machine X has a useful life of 8 years and machine Y has a useful life of 11 years. Compute the market value of Machine Y at the end of year 8 and determine which machine should be selected based on annual worth method using an interest rate of 13% per year and a study period of 8 years. $$\begin{array} { | l | l | l | } \hline \text { Machine } & x & Y \\\hline \text { First costs } & \$ 29,000 & \$ 32,000 \\\hline \text { Net annual revenue } & \$ 10,500 & \$ 12,000 \\\hline \text { Market value at the end of the } & \$ 6900 & \$ 6000 \\\text { useful life } & & \\\hline \text { Life, years } & 8 & 11 \\\hline\end{array}$$