Kleen Corp., a privately owned and operated single-stream recycling facility, has annual contracts with several cities in the Tri-County Metropolitan Area. Kleen Corp. wants to add a new set of sensors to its existing machinery that will separate plastics and metals from paper and glass materials earlier in the separation process. Two versions of the sensor equipment are available from the Green Corporation. Model 400 has a first cost of $700,000, while Model 1000 costs $1 million. Both have an expected 10% salvage value after their respective useful lives of 6 and 3 years. Assume you work for Kleen Corp. as a project engineer. You have made first-cut estimates of the annual savings (with no annual increases for efficiency) and expenses (AOC with no annual decreases or increases) for both models.

(a) Perform an ROR analysis using MARR = 5% per year to recommend one of the two models to your president. You know that your president likes dollar-per-year figures, and will want to see a plot of the annual worth amounts for different rate of return values when you visit with her.

(b) Before you finalize your recommendation, ensure that there is no ranking inconsistency present with these two alternatives. If there is not, no problem. If there is, be prepared to provide the logic of your recommendation.

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3 4 5 6 1 2 180 180 180 180 180 180 Year Model Savings, $1000/year 400 Expenses, $1000/year -40 -40 -40 -40 -40 –40 Savings, $1000/year 410 410 410 1000 Expenses, $1000/year -60 -60 -60