Company Y is going to upgrade its facility. The company has a choice between two models....
Company Y is going to upgrade its facility.
The company has a choice between two models. Model A, with a first
cost of $510 000 and a service life of 6 years, would save $100 000
per year. Model B, with a first cost of $110 000 and an expected
service life of 18 years, would save $15 000 per year. If the
company’s MARR is 8 percent, which model is the better buy?
Consider both payback period and annual worth as criteria. Also,
what is the difference in the results from the two comparison
methods?
Homework Answers
The difference between both is ,if we look at payback period method it suggests model A. But PW analysis suggests Model B.
Note- You can refer to coumpound interest factors table for the values of P/A and P/F.
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Company Y is going to upgrade its facility.
The company has a choice between two models....
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