Machine A and B are two mutually exclusive alternatives with different lives. Based on the data provided and the LCM approach, determine the correct equations to find PW of each machine at an interest rate of 10% per year.
Machine A Machine B
Initial cost,$ - 85,000 - 100,000
Annual cost, $/year - 10,000 - 8,000
Salvage value, $ 10,000 25,000
Life, years 6 3
a. PWA = - 85,000 - 10,000 (P/A, 10%,6) + 10,000 (P/F, 10%,6)
PWB = - 100,000 - 8,000 (P/A, 10%,6) - 75,000 (P/F, 10%,3)
b. PWA = - 85,000 - 10,000 (P/A, 10%,6) + 10,000 (P/F, 10%,6)
PWB = - 100,000 - 8,000 (P/A, 10%,6) - 75,000 (P/F, 10%,3) + 25,000 (P/F, 10%,6)
c. PWA = - 85,000 - 10,000 (P/A, 10%,6) + 10,000 (P/F, 10%,6)
PWB = - 100,000 - 8,000 (P/A, 10%,6) + 25,000 (P/F, 10%,6)
d. PWA = - 85,000 - 10,000 (P/A, 10%,6) + 10,000 (P/F, 10%,6)
PWB = - 100.000 - 8.0001P/A. 10% 6) - 100 0001P/E 10% 31+25.000/P/E 10% 6)
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