The following annual costs are associated with three new extruder machines being considered for use in a Styrofoam cup plant: Data X-TRUD SUPR-X Useful Life, Years 7 5 |13 First Cost $2,640,000 $2,580,000 $2,700,000 Salvage Value $102,000 $120,000 $78,000 Annual Benefit $329,000 $509,000 $677,000 M&O $59,000 $80,000 $54,000 M&O Gradient $13,000 $10,000 $17,000 The company's interest rate (MARR) is 21%. Which extruder should the Styrofoam company choose? Use Annual Cash Flow Analysis and provide the right reason. Choosing SUPR-X is best because it has the highest Annual Benefit O Choosing SUPR-X will maximize the EUAB-EAUC; its value is $96,154 higher than X and $204,047 higher than X-TRUD. Choosing SUPR-X is best because it has the lowest M&O cost in yr1 O Choosing SUPR-X will maximize the EUAB-EAUC; its value is $449,154 higher than X and $398,047 higher than X-TRUD.

The following annual costs are associated with three new extruder machines being considered for use in a Styrofoam cup plant: Data X-TRUD SUPR-X Useful Life, Years 7 5 |13 First Cost $2,640,000 $2,580,000 $2,700,000 Salvage Value $102,000 $120,000 $78,000 Annual Benefit $329,000 $509,000 $677,000 M&O $59,000 $80,000 $54,000 M&O Gradient $13,000 $10,000 $17,000 The company's interest rate (MARR) is 21%. Which extruder should the Styrofoam company choose? Use Annual Cash Flow Analysis and provide the right reason. Choosing SUPR-X is best because it has the highest Annual Benefit O Choosing SUPR-X will maximize the EUAB-EAUC; its value is $96,154 higher than X and $204,047 higher than X-TRUD. Choosing SUPR-X is best because it has the lowest M&O cost in yr1 O Choosing SUPR-X will maximize the EUAB-EAUC; its value is $449,154 higher than X and $398,047 higher than X-TRUD.

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

The following annual costs are associated with three new extruder machines being considered for
use in a Styrofoam cup plant:
Data
X-TRUD
SUPR-X
Useful Life, Years
7
13
First Cost
$2,640,000
$2,580,000
$2,700,000
Salvage Value
$102,000
$120,000
$78,000
Annual Benefit
$329,000
$509,000
$677,000
M&O
$59,000
$80,000
$54,000
M&O Gradient
$13,000
$10,000
$17,000
The company's interest rate (MARR) is 21%. Which extruder should the Styrofoam company
choose?
Use Annual Cash Flow Analysis and provide the right reason.
Choosing SUPR-X is best because it has the highest Annual Benefit
O Choosing SUPR-X will maximize the EUAB-EAUC; its value is $96,154 higher than X and $204,047 higher
than X-TRUD.
Choosing SUPR-X is best because it has the lowest M&O cost in yr1
Choosing SUPR-X will maximize the EUAB-EAUC; its value is $449,154 higher than X and $398,047 higher
than X-TRUD.

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