11. 5.22 Blue Whale Moving and Storage recently purchased a warehouse building in Santiago. The manager has two good options for moving pallets of stored goods in and around the facility. Alternative 1 includes a 4000-pound capacity, electric forklift

(P = $−30,00; n = 12 years; AOC = $−1000 per year; S = $8000), and 500 new pallets at $10 each. The forklift operator’s annual salary and indirect benefits are estimated at $82,000.

Alternative 2 uses two electric pallet movers (“walkies”) each with a 3000-pound capacity (for each mover, P = $−2,000; n = 4 years; AOC = $−150 per year; no salvage) and 800 pallets at $10 each. The two operators’ salaries and benefits will total $105,000 per year. For both options, new pallets are purchased now and every two years that the equipment is in use.

1. If the MARR is 8% per year, use tabulated factors to determine which alternative is better economically.

2. Develop your own spreadsheet to select the forklift or the walkies.

3. Use your spreadsheet to determine the maximum first cost of the forklift before the walkies become economically better. Comment on your results.