The Briggs and Stratton Commercial Division designs and manufactures small engines for golf turf maintenance equipment. A robotics-based testing system with support equipment will ensure that their new signature guarantee program entitled “Always Insta-Start” does indeed work for every engine produced. (a) Compare the annual worth values of the two systems at MARR = 10% per year. Select the better system. (b) Determine the salvage value for the Push System that will make the company indifferent between the two systems. Pull System Push System Equipment first cost, $ −1,500,000 −2,250,000 AOC, $ per year −700,000 −600,000 Salvage value, $ 100,000 50,000 Estimated life, years 8 8
The Briggs and Stratton Commercial Division designs
and manufactures small engines for golf turf
maintenance equipment. A robotics-based testing
system with support equipment will ensure that their new signature guarantee program entitled
“Always Insta-Start” does indeed work for every
engine produced. (a) Compare the annual worth
values of the two systems at MARR = 10% per
year. Select the better system. (b) Determine the
salvage value for the Push System that will make
the company indifferent between the two systems.
Pull System Push System
Equipment first cost, $ −1,500,000 −2,250,000
AOC, $ per year −700,000 −600,000
Salvage value, $ 100,000 50,000
Estimated life, years 8 8
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