Case Study 5
Dunn Manufacturing Is Considering the Following Two

Case Study 5
Dunn Manufacturing is considering the following two alternatives. The cost information for the two proposals for replacing an equipment are provided are in table below.
$\begin{array}{|l|l|l|} \hline& \text { Machine } X & \text { Machine } Y \\\hline \text { Initial cost } & \$ 120,000 & \$ 96,000 \\\hline \text { Benefits/year } & \begin{array}{l}\$ 20,000 \text { for the first } 10 \text { years } \\\text { and } \$ 9,000 \text { for the next } 10 \\\text { years }\end{array} & \begin{array}{l}\$ 12,000 \text { per year for } 20 \\\text { years. }\end{array} \\\hline \text { Life } & {20 \text { years }} \\\hline \text { Salvage value } & \$ 40,000 & \$ 20,000 \\\hline \text { MARR } & {8 \%}\\\hline\end{array}$
-If machine "Y" has no salvage value, what would be the NPW of machine "Y"?

A) $19,891
B) $20,626
C) $23,478
D) $21,816

Correct Answer:

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