Sandersen Meat Processors has asked its lead process engineer to evaluate two different types of conveyors for the bacon curing line. Type A has an initial cost of $70,000 and a life of 8 years. Type B has an initial cost of $95,000 and a life expectancy of 12 years. The annual operating cost for type A is expected to be $9000, while the AOC for type B is expected to be $7000. If the salvage values are $5000 and $10,000 for type A and type S, respectively, tabulate the incremental cash flow using their LCM.
A tool and die company in Pittsburgh is considering the purchase of a drill press with fuzzy-logic software to improve accuracy and reduce tool wear. The company has the opportunity to buy a slightly used machine for $15,000 or a new one for $21 ,000. Because the new machine is a more sophisticated model, its operating cost is expected to be $7000 per year, while the used machine is expected to require $8200 per year. Each machine is expected to have a 25-year life with a 5% salvage value. Tabulate the incremental cash flow.