Question

4. Two conveyor systems are being studied for use in a manufacturing operation. System X has a first cost of $80,000, annual costs estimated at $25,000, and a service life of 3 years. System Y has a first cost of$135,000, annual costs that begin at $20,000 in the first year and increase by $5000 each year thereafter, a service life of 6 years, and an estimated salvage value of $40,000. Using an i of8%, determine which alternative should be chosen. a) X is much better than Y b) X is slightly better than Y c) Y is much better than X d) Y is slightly better than X . Also use present worth analysis X a) -259,079 b) -349,044 c) -138,394 d) 359,349

Answer 1