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Two production lines are under evaluation. One uses waterjet cutting technology and has an initial cost of $100,000.00, an annual operating cost of $10,000.00, a useful life of 5 years, and a salvage value of $70,000.00 at the end of 5 years. The alternative uses mechanical cutting technology and has an initial cost of $85,000.00, an annual operating cost of $5,000.00, a useful life of 3years, and a salvage value of $25,000.00 at the end of 3 years. Using a present worth analysis with an interest rate of 15% determine the least costly alternative.
Sagot :
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