In: Finance
HopHeart Brewery is considering 3 different bottling
machines. It is expected that each machine will be replaceable at
the same cost when their useful life ends. The details of the
machines are as follows:
Machine X has a useful life of 6 years. It costs $10,000 to
purchase and $2,000 per year to maintain.
Machine Y has a useful life of 12 years. It costs $15,000 to
purchase, and $1,000 per year to maintain.
Machine Z has a useful life of 8 years. It costs $20,000 to
purchase, and $200 per year to maintain.
The appropriate planning horizon for analyzing these choices is 24
years
a) Using the planning horizon from part a, analyze the present
worth of the cost of each alternative if HopHeart has a MARR of
8.0%/year.
X $ ______
Y $ ______
Z $ ______