An international textile company’s North America Division must decide which type of fabric cutting machines it will use—straight knife or round knife. The estimates are summarized below. Compare them on the basis of annual worth values at i = 10% per year using (a) factors, and (b) single-cell spreadsheet functions.
 FIGURE 1.png)
(a) Factors
AWRound = -250,000(A/P,10%,6) – 31,000 + 40,000(A/F,10%,6)
= -250,000(0.22961) – 31,000 + 40,000(0.12961)
= $-83,218
AWStraight = -170,000(A/P,10%,4) – 35,000 – 26,000(P/F,10%,2)(A/P,10%,4)
+ 10,000(A/F,10%,4)
= -170,000(0.31547) – 35,000 – 26,000(0.8264)(0.31547)
+ 10,000(0.21547)
= $-93,254
Select Round Knife
(b) Round knife: = - PMT(10%,6,-250000,40000) – 31000 displays $-83,218
Straight knife: = - PMT(10%,4,-170000,10000) - 35000 - PMT(10%,4,-PV(10%,2,,
-26000)) displays $-93,254
Select Round knife
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