A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $ 80,000 with $ 2,500 salvage value after 16 years. The other can be purchased and installed for $ 105,000 with $ 2,500 salvage value after 16 years. Operation and maintenance for each is expected to be $ 17,500 and $ 11,500 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 25%, and has a MARR of 9% after taxes. Determine which alternative is less costly, based upon comparison of after-tax annual worth. Alternative 1
A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $ 80,000 with $ 2,500 salvage value after 16 years. The other can be purchased and installed for $ 105,000 with $ 2,500 salvage value after 16 years. Operation and maintenance for each is expected to be $ 17,500 and $ 11,500 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 25%, and has a MARR of 9% after taxes. Determine which alternative is less costly, based upon comparison of after-tax annual worth. Alternative 1
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
![A granary has two options for a conveyor used in the manufacture of grain for transporting,
filling, or emptying. One conveyor can be purchased and installed for $ 80,000 with $ 2,500
salvage value after 16 years. The other can be purchased and installed for $ 105,000 with $
2,500 salvage value after 16 years. Operation and maintenance for each is expected to be $
17,500 and $ 11,500 per year, respectively. The granary uses MACRS-GDS depreciation, has a
marginal tax rate of 25%, and has a MARR of 9% after taxes.
Determine which alternative is less costly, based upon comparison of after-tax annual
worth.
Alternative 1
Show the AW values used to make your decision:
Conveyor 1: $
Conveyor 2: $](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb14fe6c1-b5c5-4472-9098-4388abeb36fa%2F6d6ed696-6c42-4e97-970a-689235111c8d%2F4n8m3k_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A granary has two options for a conveyor used in the manufacture of grain for transporting,
filling, or emptying. One conveyor can be purchased and installed for $ 80,000 with $ 2,500
salvage value after 16 years. The other can be purchased and installed for $ 105,000 with $
2,500 salvage value after 16 years. Operation and maintenance for each is expected to be $
17,500 and $ 11,500 per year, respectively. The granary uses MACRS-GDS depreciation, has a
marginal tax rate of 25%, and has a MARR of 9% after taxes.
Determine which alternative is less costly, based upon comparison of after-tax annual
worth.
Alternative 1
Show the AW values used to make your decision:
Conveyor 1: $
Conveyor 2: $
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