A company is going to buy a new machine for manufacturing its products. Five machines are available. Data is as follows:
A
B
C
D
E
First Cost
P 25,200
P 31,800
P 38,500
P 46,600
P 52,500
Power per year
P 1,300
P 1,450
P 2,600
P 2,300
Labor per year
P 10,500
P 9,200
P 6,200
P 3,900
P 2,350
Maintenance per year
P 2,800
P 1,800
P 1,400
P 850
Taxes per year
3%
Life, years
5
If money is worth 15% before taxes to the company, which machine should be chosen?HINT: Use Annual Cost Method
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