Problem
Which machine should be chosen if a firm uses an interest rate of 12%? Machine A has a life of 15 years, a first cost of $45,000, annual O&M of $8000 per year, a salvage value of $6000, and an overhaul in year 9 that costs $16,000. Machine B has a life of 20 years, a first cost of $50,000, annual O&M of $8400 per year, a salvage value of $4000, and an overhaul in year 12 that costs $20,000. The machines will be used for at least 25 years. How much does the best choice save (either PW or EAC)? What assumptions have you made and why?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.