Annual Worth Analysis Assignment | Top Universities
You are head of the production department at one of the leading truck manufacturing companies in Turkey. In order to satisfy demand and deliver orders within lead time, the company needs to increase production capacity. After long discussions with engineers in the department, the decision to purchase a new machine with larger capacity is made.
However, there are only two options, Machine A and Machine B, and you need to select one of them as soon as possible to start production. Machine A: Purchasing price 10000OTL, service life 5 years, salvage value 24000 TL annual operating cost 8000 TL, extra income taxes 2500 TL per year. Machine B: Purchasing price 65500TL, service life 6 years, salvage value is negligible, annual operating costs 12000 TL. Which machine will you decide to purchase using an annual worth analysis? The interest rate is 12%. You will need the machine indefinitely and do not expect to have its price and operating costs to change significantly in the future. Answer: B (Annual Worth Analysis: -27,929.6> -34,462.4) Get Accounting Homework Help Today.