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 $90,000 with $2,500 salvage value after 16 years. The other can be purchased and installed for $130,000 with $5,500 salvage value after 16 years. Operation and maintenance for each is expected to be $14,000 and $15,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table.

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 $90,000 with $2,500 salvage value after 16 years. The other can be purchased and installed for $130,000 with $5,500 salvage value after 16 years. Operation and maintenance for each is expected to be $14,000 and $15,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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 $45,000 with $3,500 salvage value after 16 years. The other can be purchased and installed for $95,000 with $3,000 salvage value after 16 years. Operation and maintenance for each is expected to be $21,500 and $14,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table. Determine which alternative is less costly, based upon comparison of after-tax annual worth. Show the AW values used to make your decision: Conveyor 1: $ Conveyor 2: $ Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is ±10. What must the cost of the second (more expensive) conveyor be for there to be no economic…
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