FMF plans to purchase a new breed of milling machines for its operations. As it's procurement manager, Pauline, is to consider the following four options. Each of these have a useful life of 12 years with no scrap value. The company has an MARR of 14.6% Milling Machine 2 3 First Cost $98727 $157385 $203574 Annual $21195 $35971 $46010 Savings a) What is IRR for Milling Machine #1? b) What is the Incremental IRR for Milling Machine #2? c) What is the Incremental IRR for Milling Machine #3? d) Which Milling machine would be the best option?
FMF plans to purchase a new breed of milling machines for its operations. As it's procurement manager, Pauline, is to consider the following four options. Each of these have a useful life of 12 years with no scrap value. The company has an MARR of 14.6% Milling Machine 2 3 First Cost $98727 $157385 $203574 Annual $21195 $35971 $46010 Savings a) What is IRR for Milling Machine #1? b) What is the Incremental IRR for Milling Machine #2? c) What is the Incremental IRR for Milling Machine #3? d) Which Milling machine would be the best option?
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
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![FMF plans to purchase a new breed of milling machines for its operations. As it's procurement
manager, Pauline, is to consider the following four options. Each of these have a useful life of 12
years with no scrap value. The company has an MARR of 14.6%
Milling
Machine
2.
3
First Cost
$98727
$157385
$203574
Annual
$21195
$35971
$46010
Savings
a)
What is IRR for Milling Machine #1?
b)
What is the Incremental IRR for Milling Machine #2?
c)
What is the Incremental IRR for Milling Machine #3?
d)
Which Milling machine would be the best option?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F924ac2ef-29be-4c40-b59b-4086f1e3b736%2F7a3cbbe7-eaf2-4b8d-a795-ca4fe1f02f7e%2Fi92m9z_processed.jpeg&w=3840&q=75)
Transcribed Image Text:FMF plans to purchase a new breed of milling machines for its operations. As it's procurement
manager, Pauline, is to consider the following four options. Each of these have a useful life of 12
years with no scrap value. The company has an MARR of 14.6%
Milling
Machine
2.
3
First Cost
$98727
$157385
$203574
Annual
$21195
$35971
$46010
Savings
a)
What is IRR for Milling Machine #1?
b)
What is the Incremental IRR for Milling Machine #2?
c)
What is the Incremental IRR for Milling Machine #3?
d)
Which Milling machine would be the best option?
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