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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

1st 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:

  1. 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 1 year ago
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