Q1.

A company is considering buying Machine X. Its first cost of $10,000, annual operating cost
will be $8,000 for the 4 years. Company’s MARR is 10% per year. Calculate the present worth
of Machine X.

Q2.
A company is considering buying Machine X. Its first cost of $10,000, annual operating cost
will be $8,000 and has a salvage value of $2,000 after 4 years. Company’s MARR is 15% year.
Calculate the present worth of Machine X.

Q3.
A company is considering buying Machine X. Its first cost of $20,000; annual operating cost
will be $9,000; annual revenue shall be $7,000 and has a salvage of $5,000 value after 4 years.
Company’s MARR is 15% per year. Calculate the present worth of Machine X.

Q4.
A company is considering buying Machine X. Its first cost of $35,000 and will have a salvage
value of $6,000 after 3 years. Details of revenue and cost is given below:
Year Revenue Cost
1 $2,000 $2,000
2 $3,000 $2,500
3 $1,000 $4,000

Calculate present worth of Machine X, assuming a MARR of 4% per year.

Q5.
Alternative X has a first cost of $20,000, an operating cost of $9,000 per year and a $5,000
salvage value after 5 years. Alternative Y will cost $35,000 with an operating cost of $4,000
per year and a salvage value of $7,000 after 5 years. At a MARR of 12% per year which should
be selected?
Q6.
Alternative X has a first cost of $20,000, an operating cost of $9,000 per year and a $5,000
salvage value after 5 years. Alternative Y will cost $35,000 with an operating cost of $4,000
per year and a salvage value of $7,000 after 10 years. At a MARR of 12% per year which
should be selected?

Q7.
Alternative X has a first cost of $20,000, an operating cost of $9,000 per year, an annual
revenue of $12,000 and a $5,000 salvage value after 5 years. Alternative Y will cost $35,000
with an operating cost of $4,000 per year, annual revenues of $3,000 and a salvage value of
$7,000 after 5 years. At a MARR of 12% per year which should be selected?

Q8.
A company is considering two alternatives Machine X and Machine Y. Details are:
X Y
Initial investment $20,000 $35,000
Operating cost/ year $4,000 $6,000
Revenues/ year $5,000 $6,500
Salvage $5,000 $9,000

Life (in years) 6 9

MARR 4% 4%