(A) Sales and cost data for two mutually exclusive designs for a machine to make pressure sensors are shown in the table below. Your MARR is 20% and the study period is 6 years. Using the annual worth (AW) method of calculation, which machine should you buy? What is the AW of this machine?
Machine A Machine B
C = Capital Investment $51,000 $39,000
E = Estimated Units sold per year 20,000 18,000
p = Unit selling price $6.25 $7.60
R = annual revenue = E*p = $125,000 $136,800
c$_v$ = variable cost per unit = $2.50 $3.25
C$_f$ = fixed annual expenses = $18,000 $21,000
F = Market Value at end of useful life $19,500 $11,750
Answer Box: