Discount Rate (i) Initial Cost Revenue Maintenance Life (year) Salvage Value Annual Worth of Initial Cost Annual Worth of Salvage 7% Machine A Machine B $310,000 $370,000 $70,000 $120,000 $15,000 $20,000 10 5 $20,000 $0 Rp44,137.03 Rp90,239.56 Rp1,447.55 Rp0.00 Functions =NPV(C19;G23:G33) =IRR(G23:G33) =PMT(C19;C25;-G34) =C23+C29 =C24+C28 =G37/G38 Cashflow Table Machine A Machine B Period (n) Cashflow Cashflow 0 -$310,000 -$370,000 1 $55,000 $100,000 2 $55,000 $100,000 3 $55,000 $100,000 4 $55,000 $100,000 5 $55,000 -$270,000 6 7 8 9 10 $55,000 $100,000 $55,000 $100,000 $55,000 $100,000 $55,000 $100,000 $75,000 $100,000 NPV $80,807 $64,068 IRR 13% 11% Annual Worth Rp11,505.16 Rp9,121.91 Benefits $71,447.55 $120,000.00 Cost $59,137.03 $110,239.56 B/C Ratio 1.208169485 1.088538482 Conclusion (B) Assuming this is a Mutually Exclusive Project Choose Machine A because it has higher NPV, IRR, AW, and B/C Ratio Meaning that Machine A is more Profitable Cashflow Table Note Initial Cost Annual Cashflow is Revenue - Maintenance Annual Cash Flow - Price of Purchasing New Machine B, but Not Necessary for Machine A Annual Cashflow is Revenue - Maintenance (a) Net Present Value of Each Project Internal Rate of Return (a) Annual Worth Annual Revenue + Annual Worth of Salvage Value Maintenance + Annual Worth of Initial Cost (a) Benefit / Cost ratio Mutually Exclusive Project A because it has higher NPV, IRR, AW, and B/C Ratio chine A is more Profitable