The Thunderbird Winery must replace its present grape pressing equipment. Two alternatives are under consideration, the...

The Thunderbird Winery must replace its present grape pressing equipment. Two alternatives are under consideration, the Quick-Skwish and the Stomp-Master. The Thunderbird Winery has a Minimum Attractive Rate of Return of 4%. Which machine should be chosen? (use NPW Method)

	Quick-Skwish	Stomp-Master
Initial Cost	$250,000	$400,000
1^st Year Operating Expense	$ 18,000	$ 12,500
Operating Expense Gradient (begins in year 2)	$2000	$1,000
Salvage Value	$ 25,000	$ 40,000
Useful Life (years)	5	10

Complete the problem using the following methods:

By hand calculations on Engineering Computation Paper
1. IPE Approach, Interpretation will be a cash flow diagram for each
2. Communicate your formulas correctly, showing the variables; followed by the data; followed by the value you used. (Example: In separate lines of the solution your equations should read as follows:
  1. … + F(p/f,i%,n) …
  2. ... + $40,000(p/f,4%,5) …
  3. … + $40,000(0.8219)

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Expert Solution

venereology answered 7 months ago

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