A Slip Sheet Manufacturer Is Considering Two Machines

Essay

A slip sheet manufacturer is considering two machines. An engineer is asked to perform analyses to select the best machine. She prepares the following information for the evaluation. All machines have a useful life of 5 years. If the company's MARR is 4% per year, which machine should be selected. $$\begin{array} { | l | l | l | } \hline \text { Machine } & X & Y \\\hline \text { First costs } & \$ 52,000 & \$ 37,000 \\\hline \text { Annual expenses } & \$ 5750 & \$ 8050 \\\hline \text { Annual revenue } & \$ 15,250 & \$ 15,750 \\\hline \text { Salvage value } & \$ 23,400 & \$ 5550 \\\hline \text { IRR } ( \% ) & 9.10 & 5.62 \\\hline\end{array}$$