Kruber company located Tennessee is considering two different makes of a blow molding machine for one of its automotive products. The cost data for the two alternatives are provided in table below. MARR =12%.
$$\begin{array} { | l | l | l | }
\hline & \text { Machine } X & \text { Machine } Y \
\hline \text { Iritial cost } & \$ 150 K & \$ 275 K \
\hline \text { Annuul operating cost } & 55 \mathrm {~K} & 60 K \
\hline \text { Benefits /Year } & 100 K & 120 K \
\hline \text { Salvage value } & 20 K & 40 K \
\hline \text { Life } & { 10 \text { Years } } \
\hline
\end{array}$$
A) Machine X
B) Machine Y

Question

Kruber company located Tennessee is considering two different makes of a blow molding machine for one of its automotive products. The cost data for the two alternatives are provided in table below. MARR =12%.
$$\begin{array} { | l | l | l | } 
\hline & \text { Machine } X & \text { Machine } Y \
\hline \text { Iritial cost } & \$ 150 K & \$ 275 K \
\hline \text { Annuul operating cost } & 55 \mathrm {~K} & 60 K \
\hline \text { Benefits /Year } & 100 K & 120 K \
\hline \text { Salvage value } & 20 K & 40 K \
\hline \text { Life } & { 10 \text { Years } } \
\hline
\end{array}$$
A) Machine X
B) Machine Y

Quizplus · Accepted Answer

Machine X has a lower equivalent annual cost ($70,000) than Machine Y ($85,000).

Kruber Company Located Tennessee Is Considering Two Different Makes of a Blow