To reduce grape processing costs at a winery, a Six Sigma pr…
Questions
Tо reduce grаpe prоcessing cоsts аt а winery, a Six Sigma project team has decided to purchase a new de-stemmer machine. The team must decide between two machines: the Rauch A20 and the C.M.A. Dream. Both machines have comparable quality levels and the same capacity, but different costs. The team needs to analyze the costs for both machines over a seven-year study period, with an MARR (an interest rate) of 12% per year. Machine 1: The Rauch A20 will cost $41,000 now, have operating costs of $6,000 per year, and have a salvage value of $3,000. What is the net present worth of the cash flows for Machine 1? [a20] The net present worth of the cash flows for Machine 2 is −$84,400. Which machine should the team select? [select]