The Ecology Group wishes to purchase a piece of equipment for metal recycling. Machine 1 costs

$123,000, has a life of 10 years, an annual cost of $5000, and requires one operator at a cost of $24 per hour. It can process 10 tons per hour. Machine 2 costs $70,000, has a life of 6 years, an annual cost of $2500, and requires two operators at a cost of $24 per hour for each operator. It can process 6 tons per hour.

a. Determine the breakeven tonnage of scrap metal at i  7% per year and select the better machine for a processing level of 1000 tons per year.

b. Calculate and plot the sensitivity of the breakeven tons per year to 15% change in the hourly cost of an operator.