Deep Seas Submarine must implement a new engine in its submarines to meet the needs of clients
Question:
Deep Seas Submarine must implement a new engine in its submarines to meet the needs of clients who desire quieter operation. Two designs, both technologically feasible, have been created, and Deep Seas wishes to know which one to pursue. Design 1 would require an up-front manufacturing cost of \(\$ 15,000,000\) and will cost \(\$ 2,500,000\) per year for 3 years to swap out the engines in all its current submarines. Design 2 will cost \(\$ 20,000,000\) up front, but due to a higher degree of compatibility will only require \(\$ 1,500,000\) per year to implement. MARR is 10 percent/year. Based on a present worth analysis, determine which design should be chosen.
Step by Step Answer:
Principles Of Engineering Economic Analysis
ISBN: 9781118163832
6th Edition
Authors: John A. White, Kenneth E. Case, David B. Pratt