2. 5.13 A materials engineer is considering two compounds for the outer shells of optical fibers. The germanium tetrachloride process (G) has the following estimates: first cost of $85,000; annual M&O costs of $32,000;

a useful life of 8 years; and a $20,000 salvage value. The phosphorus oxychloride process (P) will have a first cost of $97,000, annual M&O costs of $27,000, a useful life of 3 years, and a $48,000 salvage value.

The MARR is 12% per year.

1. Which process should be selected on the basis of an annual worth comparison? Use a 3-year study period. Assume the G process will have a market value of $40,000 after 3 years.

2. Is the selection different if the full 8-year life is allowed for procss G? Why?