Donot use excel show all work step by step 1 ABC Co is plann

Donot use excel show all work step by step...

(1) ABC Co. is planning to purchase a CNC machine. The engineering team approved 3 models. All models have the required specifications. The following table summarizes information which is associated with three machines considered for purchasing. Assume ABC Co. can replace the CNC machine at the end of the useful life with the exact same machine and the same price. Note that M&O; stands for Maintenance & Operation Cost. The company\'s interest rate (MARR) is 10%. Which CNC machine should the company choose? Use Annual Cash Flow Analysis to answer the question Solve the problem using compounding factors. Show all required compounding factors (XX, i%, n) Round the answer to zero decimal place. Excel solution is NOT accepte d. Useful Life (Years) First Cost Salvage Value Annual Benefit M&O; in year 1 M&O; annual increase 13 S1,800,000 180,000 535,000 85,000 12,000 $2,180,000 170,000 650,000 82,000 11,000 S3.200,000 250,000 650,000 75,000 10,000

Solution

Statement showing Annual worth

For A

For B

For C

Thus project B should be selected

Particulars	0	1	2	3	4	5	6	7	8	9	10	11	12	13	Total
First cost	-1800000
Annual benefits		535000	535000	535000	535000	535000	535000	535000	535000	535000	535000	535000	535000	535000
M&O		-85000	-97000	-109000	-121000	-133000	-145000	-157000	-169000	-181000	-193000	-205000	-217000	-229000
Salvage value														180000
Total cash flow	-1800000	450000	438000	426000	414000	402000	390000	378000	366000	354000	342000	330000	318000	486000
PVIF @ 10%	1	0.9091	0.8264	0.7513	0.6830	0.6209	0.5645	0.5132	0.4665	0.4241	0.3855	0.3505	0.3186	0.2897
Present value	-1800000	409090.9	361983.5	320060.1	282767.6	249610.4	220144.8	193973.8	170741.7	150130.6	131855.8	115663	101324.6	140776.9	1048124
PVIFA(10%,13years)															7.1034
Equivalent annual cost															147552.4