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Question An organization is considering the purchase of new machines to automatically conduct some quality control tasks.

Question

An organization is considering the purchase of new machines to automatically conduct some quality control tasks. The machines are expected to save production cost which is given below as Annual Income. The machines are expected to be part of the production process for 5 years. The company has a minimum attractive rate of return (MARR) of 10%. The following data is available for these new machines:

a. Calculate the Net Present Worth (NPW) of each alternative.

b. Did you identify any infeasible alternative?

c. Calculate the Internal Rate of Return (IRR) of each alternative.

d. Rank alternatives based on initial cost.

e. Using incremental IRR analysis, what is the best alternative?

f. Using results from [a] what is the best alternative?

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