**Present Worth Analysis of Expansion Anchor Production Methods**Two methods can be used to produce expansion anchors. **Method A:**- **Initial Cost:** $90,000- **Salvage Value After 3 Years:** $19,000- **Operating Costs:** - Year 1: $40,000 - Increases by $4,000 annually**Method B:**- **Initial Cost:** $120,000- **Salvage Value After 3 Years:** $50,000- **Operating Costs:** - Year 1: $8,000 - Increases by $8,000 annually**Question:**At an interest rate of 12% per year, which method should be used based on a present worth analysis?- The present worth for method A is $____.- The present worth for method B is $____.The analysis requires evaluating which method is more cost-effective over a 3-year period by calculating the present worth based on the given costs, salvage values, and operating expenses.

here we calculate the Present Worth of the both method by using the given information so the…

Two methods can be used to produce expansión anchors. Method A costs $90,000 initially and will have a $19,000 salvage value after 3 years. The operating cost with this method will be $40,000 in year 1, increasing by $4000 each year. Method B will have a first cost of $120,000, an operating cost of $8000 in year 1, increasing by $8000 each year, and a $50,000 salvage value after its 3-year life. At an interest rate of 12% per year, which method should be used on the basis of a present worth analysis? The present worth for method A is $

Two methods can be used to produce expansión anchors. Method A costs $90,000 initially and will have a $19,000 salvage value after 3 years. The operating cost with this method will be $40,000 in year 1, increasing by $4000 each year. Method B will have a first cost of $120,000, an operating cost of $8000 in year 1, increasing by $8000 each year, and a $50,000 salvage value after its 3-year life. At an interest rate of 12% per year, which method should be used on the basis of a present worth analysis? The present worth for method A is $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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