Installation
Data for two machines P and Q are as shown below. At what MARR will both machines be equally attractive for installation?
Machine P Machine Q
Initial cost $125,000 $275,000
Life in years 4 6
Inflation per year (for all costs) 2.00%
Benefit increase per year 4.50%
MARR per year compounded yearly 12.00%
Project life in years 12
First year estimated costs $33,750 $63,250
First year estimated benefits $65,000 $112,750
Salvage value of machine (% of initial cost) 12.00% 8.00%