Two alternative means of providing engineering drafting services are under consideration.Handy-Cam$250,000$115/hr$250/hr$15,000R-tistry$200,000$120/hr$250/hr$20,000Purchase PriceOperating CostRevenueMarket value (end of useful life)Useful lifeб yearsб yearsIt is anticipated that the chosen alternative will be used to generate revenue 8 hrs/day, 250 days per year. The company uses a MARR = 12% for allinvestments. For the anticipated annual use of the drafting services, which alternative would you recommend? Remember to show your calculations in your supportingwork.O Handy-CamO R-tistry

The first step will be to determine the annual cash flows for both the alternatives here.

Answered: For the anticipated annual use of the…

For the anticipated annual use of the drafting services, which alternative would you recommend? Remember to show your calculations in your supporting work. O Handy-Cam O R-tistry

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Two alternative means of providing engineering drafting services are under consideration.
Handy-Cam
$250,000
$115/hr
$250/hr
$15,000
R-tistry
$200,000
$120/hr
$250/hr
$20,000
Purchase Price
Operating Cost
Revenue
Market value (end of useful life)
Useful life
б years
б years
It is anticipated that the chosen alternative will be used to generate revenue 8 hrs/day, 250 days per year. The company uses a MARR = 12% for all
investments.

For the anticipated annual use of the drafting services, which alternative would you recommend? Remember to show your calculations in your supporting
work.
O Handy-Cam
O R-tistry

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