Appledale Dairy is considering upgrading an old ice-cream maker. Upgrading is available at two levels: moderate and extensive. Moderate upgrading costs $6,900 now and yields annual savings of $3,600 in the first year, $3,250 in the second year, $2,900 in the third year, and so on. Extensive upgrading costs $10,550 and saves $7,700 in the first year. The savings then decrease by 20 percent each year thereafter. If the upgraded ice-cream maker will last for seven years, which upgrading option is better? Use a present worth comparison. Appledale's MARR is 5 percent. Click the icon to view the table of compound interest factors for discrete compounding periods when i = 5%. The present worth of the moderate upgrading option is $ and the present worth of the extensive upgrading option is $ The V upgrading option is better. (Round to the nearest cent as needed.)

Appledale Dairy is considering upgrading an old ice-cream maker. Upgrading is available at two levels: moderate and extensive. Moderate upgrading costs $6,900 now and yields annual savings of $3,600 in the first year, $3,250 in the second year, $2,900 in the third year, and so on. Extensive upgrading costs $10,550 and saves $7,700 in the first year. The savings then decrease by 20 percent each year thereafter. If the upgraded ice-cream maker will last for seven years, which upgrading option is better? Use a present worth comparison. Appledale's MARR is 5 percent. Click the icon to view the table of compound interest factors for discrete compounding periods when i = 5%. The present worth of the moderate upgrading option is $ and the present worth of the extensive upgrading option is $ The V upgrading option is better. (Round to the nearest cent as needed.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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