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Two production methods are proposed. Method A cost $60,000 initially, will have an operating cost (ANNUAL) of $28,000 per year, and salvage of $15,000. Method B will have a first cost of $120,000, operating cost of $8,500 per year (ANNUAL) and salvage value of $40,000. Both have 3 year life and use a MARR of 12%. Using PW, which one would you select?

Two production methods are proposed. Method A cost $60,000 initially, will have an operating cost (ANNUAL) of $28,000 per year, and salvage of $15,000. Method B will have a first cost of $120,000, operating cost of $8,500 per year (ANNUAL) and salvage value of $40,000. Both have 3 year life and use a MARR of 12%. Using PW, which one would you select?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Two production methods are proposed. Method A cost $60,000 initially, will have an operating cost (ANNUAL) of $28,000 per year, and salvage of $15,000. Method B will have a first cost of $120,000, operating cost of $8,500 per year (ANNUAL) and salvage value of $40,000. Both have 3 year life and use a MARR of 12%. Using PW, which one would you select?
Transcribed Image Text:Two production methods are proposed. Method A cost $60,000 initially, will have an operating cost (ANNUAL) of $28,000 per year, and salvage of $15,000. Method B will have a first cost of $120,000, operating cost of $8,500 per year (ANNUAL) and salvage value of $40,000. Both have 3 year life and use a MARR of 12%. Using PW, which one would you select?
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