A firm is evaluating two machines. The first costs $250,000 and will require annual maintenance of $30,000 per year for 10 years. At the end of 10 years, the salvage value will be $75,000. The second machine costs $400,000, and will require maintenance of $225,000 at the end of the fifth year. The salvage value after 10 years will be $175,000. Which machine should the firm select if interest is 8.5% compounded annually?

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The Answer of A firm is evaluating two machines. The first costs $250,000 and will require annual maintenance of $30,000 per year for 10 years. At the end of 10 years, the salvage value will be $75,000. The second machine costs $400,000, and will require maintenance of $225,000 at the end of the fifth year. The salvage value after 10 years will be $175,000. Which machine should the firm select if interest is 8.5% compounded annually?

A Firm Is Evaluating Two Machines