Blue Whale Moving and Storage recently purchased a warehouse building in Santiago. The manager has two good options for moving pallets of stored goods in and around the facility. Alternative 1 includes a 4000-pound capacity, electric forklift (P = $-30,000; n = 12 years; AOC = $-1000 per year; S = $8000), and 500 new pallets at $10 each. The forklift operator's annual salary and indirect benefits are estimated at $32,000. Alternative 2 involves the use of two electric pallet movers ("walkies") each with a 3000-pound capacity (for each mover, P = $-2000; n = 4 years; AOC = $-150 per year; no salvage) and 800 pallets at $10 each. The two operators' salaries and benefits will total $55,000 per year. For both options, new pallets are purchased now and every 2 years that the equipment is in use. (a) If the MARR is 8% per year, select the better alternative.

Blue Whale Moving and Storage recently purchased a warehouse building in Santiago. The manager has two good options for moving pallets of stored goods in and around the facility. Alternative 1 includes a 4000-pound capacity, electric forklift (P = $-30,000; n = 12 years; AOC = $-1000 per year; S = $8000), and 500 new pallets at $10 each. The forklift operator's annual salary and indirect benefits are estimated at $32,000. Alternative 2 involves the use of two electric pallet movers ("walkies") each with a 3000-pound capacity (for each mover, P = $-2000; n = 4 years; AOC = $-150 per year; no salvage) and 800 pallets at $10 each. The two operators' salaries and benefits will total $55,000 per year. For both options, new pallets are purchased now and every 2 years that the equipment is in use. (a) If the MARR is 8% per year, select the better alternative.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Blue Whale Moving and Storage recently purchased a warehouse building in Santiago. The
manager has two good options for moving pallets of stored goods in and around the facility.
Alternative 1 includes a 4000-pound capacity, electric forklift (P = $-30,000; n = 12 years; AOC
= $-1000 per year; S = $8000), and 500 new pallets at $10 each. The forklift operator's annual
salary and indirect benefits are estimated at $32,000. Alternative 2 involves the use of two electric
pallet movers ("walkies") each with a 3000-pound capacity (for each mover, P = $-2000; n = 4
years; AOC = $-150 per year; no salvage) and 800 pallets at $10 each. The two operators' salaries
and benefits will total $55,000 per year. For both options, new pallets are purchased now and every
2 years that the equipment is in use. (a) If the MARR is 8% per year, select the better alternative.

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