Question

Currently companies seek to improve their operations with the acquisition of equipment that reduces their costs. One of the companies that works with this scheme is GR Distribuidora. This company is in the process of expanding and requires the purchase of transportation vehicles for its warehouse areas that have organic fertilizer products. As there has been an increase in demand, the distribution of products is very important for customer satisfaction. The plant in the city of Puebla is in an expansion process and has found two suppliers that offer the required vehicle characteristics. The company wishes to choose between the two providers, the TMAR rate is 9% per year and the cost estimates are as follows:

PROVEEDOR A	PROVEEDOR B
Valor del equipo	$22,000	$18,000
Costos de operación y mantenimiento por año	$6000	$9000
Costo de refacciones	0	$2000 cada 4 años (Año 4 Y 8)
Valor de rescate	$3000	$8000
Vida en años	4	12

With which supplier will you buy the new transport vehicle? Use the annual value method. Put your answer of the best annual value including the negative sign since it is a cost analysis. Don't put the $ symbol, just the number.

Answer 1

The given data is executed in an excel:

From supplier B buy the new transport vehicle, since the Annual cost is less for supplier B.

The excel calculation and formula used are shown below:

The A/P value is taken from the factor table.

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