Two Flash Vaporizer Machines Are Considered for the Upgrade of Biodiesel

question 2

Essay

Two flash vaporizer machines are considered for the upgrade of biodiesel production. An engineer is asked to perform analyses to select the best machine. He prepares the following information for the evaluation. Machine X has a useful life of 8 years and machine Y has a useful life of 11 years. Compute the market value of Machine Y at the end of year 8 and determine which machine should be selected based on annual worth method using an interest rate of 13% per year and a study period of 8 years.

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Definitions:

Fixed Costs

Costs that do not change with the level of production or sales over a certain period, such as rent or salaries.

Profit

The financial gain obtained when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Units

Refers to a standard quantity or measurement used for comparison and calculation, such as in physics or mathematics.

Month

A unit of time, approximately 30 days, used as a standard measurement for billing cycles, budgeting, and financial forecasting.