meter, with both components assumed to be paid at year-end. Actual use is expected to be 1,500 hours and 250 days per year. Using a 4-year planning horizon, a before-tax analysis, and a MARR of 15 percent, determine the preferred alternative using the annual cost criterion. a. Consider only the above information and use t
A currently owned shredder used in a refuse-powered electrical generating plant has a
$210,000 and is expected to have a market value of $10,000 after 4 years. Operating and maintenance
disbursements are $100,000 per year. An equivalent shredder can be leased for $200 per day plus $80 per
hour of actual use as determined by an hour meter, with both components assumed to be paid at year-end. Actual use
is expected to be 1,500 hours and 250 days per year. Using a 4-year planning horizon, a before-tax analysis, and a
MARR of 15 percent, determine the preferred alternative using the annual cost criterion.
a. Consider only the above information and use the
b. Consider the addition of a third alternative, to operate without any shredder at all, at an annual cost of $190,000.
Use the cash flow approach (insider’s viewpoint approach). (11.2.1)
c. Consider only the above information and use the opportunity cost approach (outsider’s viewpoint approach).
(11.3.1)
d. Consider the addition of a third alternative, to operate without any shredder at all, at an annual cost of $190,000.
Use the opportunity cost approach (outsider’s viewpoint approach). (11.3.1)
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