Question: Two machines can be used for manufacturing aluminum cans. Machine 'A' will have a first cost of $150,000, an operating cost of $16,000 per year, and a salvage value of $28,000 after its 2-year life. Machine 'B' will have a first cost of $350,000, an operating cost of $9,000 per year, and a $70,000 salvage value after its 6-year life. Machine 'B' will also require updating at the end of year 4 at a cost of $30,000
Which machine should be selected on the basis of a future worth analysis at an interest rate of 11% per year? (show your calculations of the future worth for both options)