Consider the two mutually exclusive alternatives related to an improvement project, and recommend which one should be implemented using the annual worth method. The MARR is 12%, and the study period is 10 years. Assume repeatability (i.e., that the project with the 5 year life cycle could be repeated at the same investment with the same revenue and salvage value).
Machine A
Machine B
Capital investment
$18,600
$20,600
Annual cash flow
$5,650
$5,850
Market value
$4,100
$2600
Useful life (years)
5
10