Question
In: Economics
The management of Brawn Engineering is considering three alternatives to satisfy an OSHA requirement for safety...
The management of Brawn Engineering is considering three alternatives to satisfy an OSHA requirement for safety gates in the machine shop. Each gate will completely satisfy the requirement, so no combinations need to be considered. The first costs, operating costs, and salvage values over a 5-year planning horizon are shown below.
| End of Year | Gate 1 | Gate 2 | Gate 3 |
|---|---|---|---|
|
0 |
-$15,000 | -$19,000 | -$24,000 |
|
1 |
-$6,500 | -$5,600 | -$4,000 |
|
2 |
-$6,500 | -$5,600 | -$4,000 |
|
3 |
-$6,500 | -$5,600 | -$4,000 |
|
4 |
-$6,500 | -$5,600 | -$4,000 |
|
5 |
-$6,500 + $0 | -$5,600 + $2,000 | -$4,000 + $5,000 |
Show the comparisons and internal rates of return used to make your
decision:
Comparison 1: IRR 1: %
Comparison 2: IRR 2: %
Using an internal rate of return analysis with a MARR of
20%/year, determine the preferred gate. select a gate
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Rahul Sunny answered 1 year agoRelated Solutions
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