Two processes are being considered for the production of a machine part. Process 1 requires an equipment cost of P180 000.00, a yearly operating cost of P90 000.00, and has zero salvage value at the end of its 6-year life. Process 2 has corresponding figures of P320 000.00, P72 000.00, P45 000.00 and 9-year life. If the applied MARR is 20%, compare the two processes using PW analysis

Calculating EAC You are evaluating two different silicon wafer milling machines. The Techron I costs $265,000, has a 3-year life, and has pretax operating costs of $41,000 per year. The Techron II costs $330,000, has a 5-year life, and has pretax operating costs of $52,000 per year. For both milling machines, use straight-line depreciation to zero over the project’s life and assume a salvage value of $25,000. If your tax rate is 21 percent and your discount rate is 9 percent, compute the EAC for both machines. Which do you prefer? Why?

A company with a MARR of 10% must install one of two production machines. The economic parameters of each machine are as follows: Machine Initial cost (5) Service life (years) Salvage value end of life (S) $15,000 4 years $22,000 6 years 52,000 $1,000 The Future worth (FW) for the machine Y over the 12 years analysis period is:

Machines that have the following costs are under consideration for a new manufacturing process. Compute the Equivalent Annual Worth with an interest rate of 8%, compounded semiannually. The machine last 4 years. First cost: $40,000 Semiannual Operating cost: $8,970 Semiannual incomes: $14,000 Salvage value: $10,000 a. EAW = $2,285 Ob. EAW = $175 O c. EAW = $1,958 O d. EAW $ 21,745