In a chlorine-fluxing installation in a large aluminum company, engineers are considering the replacement of existing plastic pipe fittings with more expensive, but longer lived, copper fittings. The following table gives a comparison of the capital investments, lives, salvage values, and so on of the two mutually exclusive alternatives under consideration:

Depreciation amounts are calculated with the SL method. Assume an income tax rate of 40% and a MARR after-taxes of 12% per year. Which pipe fitting would you select and why? Carefully list all assumptions that you make in performing the analysis.

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Plastic $5,000 5 years Copper $10,000 10 years Capital investment Useful (class) life Salvage value 1,000 SV5) $5,0000SV10) for depreciation purposes Annual Market value at end $300 $0 $100 S0 expenses of useful life