Alternatives A B Capital investment Annual expenses“ Useful life (years) Market value (at end of life) $272,000 $346,000 28,800 19,300 6 9 $25,000 $40,000 a Excludes the cost of an operator, which is the same for both alternatives.
As the supervisor of a facilities engineering department, you consider mobile cranes to be critical equipment. The purchase of a new medium-sized, truck-mounted crane is being evaluated. The economic estimates for the two best alternatives are shown in the following table. You have selected the longest useful life (nine years) for the study period and would lease a crane for the final three years under Alternative A. On the basis of previous experience, the estimated annual leasing cost at that time will be $66,000 per year (plus the annual expenses of $28,800 per year). The MARR is 15% per year. Show that the same selection is made with Solve, a. the PW method. b. the
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