Kiwidale Dairy is considering purchasing a new ice-cream maker. Two models, Smoothie and Creamy, are available and their information is given below. (perform all calculation using 5 significant figures, and give your final answer to 1 decimal place). (a) What is Kiwidale's MARR that makes the two alternatives equivalent? Use a present worth comparison. Smoothie 15,000 12 years 4,700 1,400 2,250 Creamy 40,000 First Cost Service Life Annual profit Annual operating cost Salvage value A MARR which makes the two alternatives equivalent in term of PW is 12 years 12,000 3,720 5,400

Kiwidale Dairy is considering purchasing a new ice-cream maker. Two models, Smoothie and Creamy, are available and their information is given below. (perform all calculation using 5 significant figures, and give your final answer to 1 decimal place). (a) What is Kiwidale's MARR that makes the two alternatives equivalent? Use a present worth comparison. Smoothie 15,000 12 years 4,700 1,400 2,250 Creamy 40,000 First Cost Service Life Annual profit Annual operating cost Salvage value A MARR which makes the two alternatives equivalent in term of PW is 12 years 12,000 3,720 5,400

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Kiwidale Dairy is considering purchasing a new ice-cream maker. Two models, Smoothie and Creamy, are available and their
information is given below. (perform all calculation using 5 significant figures, and give your final answer to 1 decimal place).
(a) What is Kiwidale's MARR that makes the two alternatives equivalent? Use a present worth comparison.
Creamy
First Cost
40,000
Service Life
12 years
Annual profit
12,000
Annual operating cost
3,720
Salvage value
5,400
A MARR which makes the two alternatives equivalent in term of PW is
Smoothie
15,000
12 years
4,700
1,400
2,250

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Step 1: Determine the given variable:

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Step 2: Determine the present worth of smoothie at MARR =i%

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Step 3: Determine the value if i that makes PW of each alternative equal to each other:

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