A company is considering the purchase of a machine. For this he has received two...
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Accounting
A company is considering the purchase of a machine. For this he has received two proposals that meet the requested technical requirements. The considerations economic of each machine are the following:
Machine A Machine B
Initial cost $ 60,000 $ 40,000
Maintenance cost in the first year 5,000 8,000
Annual increase in maintenance cost 600 10%
Shelf life (years) 8 4 Salvage Value 6,000 4,000
Considering an interest rate of 5% capitalized annually, what machine would you recommend Use the net present value criterion.
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