A die making unit is planning to install a new CNC electric discharge machine in its job shop machines from two reputed manufacturers are available in the market. The relevant data about their products is as under
|
|
Manufacturer A
|
Manufacturer B
|
|
Present cost
|
Rs.1.00crore
|
Rs.1.50crore
|
|
Annual operating+
Maintenance cost
|
Rs.0.20crore
|
Rs.0.12crore
|
|
Salvage value at the end of useful life
|
Rs.0.05crore
|
Rs.0.02crore
|
|
Estimated useful life
|
10 years
|
10 years
|
Considering rate of return to be 12% per year what is the best alternative?
Take Pwf series at 12% for 10 years = 5.65
Pwf single payment at 12% for 10 years = 0.322