10. A business firm is considering purchasing equipment that will reduce their annual operating costs by $46,000. The equipment costs $210,000 and has a residual value of $21,000 at the end of its useful life of 8 years. The annual maintenance cost is $9,000. While not in use by the firm, the equipment can be rented to other companies to generate an average income of $14,000 per year. If the cost of money is 12% compounded annually, would you recommend the purchase of the said equipment? Justify your answer using the applicable project assessment tools discussed in the class. 11. Three mutually exclusive design alternatives are being considered. The estimated sales and cost data for each alternative are the following: Investment Cost ($) Estimated quantity to be sold per year (units) Selling Price ($ per unit) Variable Costs ($) Annual Expenses Fixed Cost ($) Residual Value ($) Useful Life (years) 30,000 15.000 3.10 1.00 15,000 10,000 10 B 60,000 20,000 4.40 1.40 30,000 10,000 10 40,000 18,000 3.70 0.90 25,000 10,000 10 - Evaluate the three design alternatives using various assessment tools and determine which alternative is preferred. Note: MARR = 20%