Two alternatives are being considered for recovering aluminum from garbage. Alternative 1 has a capital cost of $100,000 and a first-year maintenance cost of $12,000, with maintenance increasing by $500 per year for each year after the first. Alternative 2 has a capital cost of $140,000 and a first-year maintenance cost of $4000, with maintenance increasing by $1000 per year after the first. Revenues from the sale of aluminum are $20,000 in the first year, increasing $2000 per year for each year after the first. The life of both alternatives is 10 years. There is no salvage value. The before-tax MARR is 4%. Use present worth analysis to determine which alternative is preferred.
Two alternatives are being considered for recovering aluminum from garbage. Alternative 1 has a capital cost of $100,000 and a first-year maintenance cost of $12,000, with maintenance increasing by $500 per year for each year after the first.
Alternative 2 has a capital cost of $140,000 and a first-year maintenance cost of $4000, with maintenance increasing by $1000 per year after the first. Revenues from the sale of aluminum are $20,000 in the first year, increasing $2000 per year for each year after the first. The life of both alternatives is 10 years. There is no salvage value. The before-tax MARR is 4%. Use present worth analysis to determine which alternative is preferred.
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