A company is considering purchasing a more ergonomic machine the has better designed human interfaces. The machine costs $43,664, has an annual operation and maintenance cost of $6,676, has a useful life of 6 years, and has no expected salvage value. If the savings in terms of safety, fatigue, and muskoskeletal concerns by adopting this machine are expected to be $12,065 per year, what is the max amount we would be willing to pay for such a machine if our business requires a MARR of 0.09.
| MARR | 0.09 | |||||||
| Year | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | ||
| Yearly saving | $ 12,065.00 | $ 12,065.00 | $ 12,065.00 | $ 12,065.00 | $ 12,065.00 | $ 12,065.00 | ||
| Net present value @ MARR | $ 11,068.81 | $ 10,154.87 | $ 9,316.39 | $ 8,547.15 | $ 7,841.42 | $ 7,193.97 | ||
| Total NPV of Saving | $ 54,122.61 | |||||||
| The maximum amount company is willing to pay for new machine is total NPV of Saving which is $ 54,122.61 | ||||||||
A company is considering purchasing a more ergonomic machine the has better designed human interfaces. The...