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2 Westmount Waxworks is considering buying a new waxmelter for its line of replicas of statues of government leaders. There are two choices of supplier,
2 Westmount Waxworks is considering buying a new waxmelter for its line of replicas of statues of government leaders. There are two choices of supplier, Finedetail and Simplicity. Their proposals are as follows: Simplicity Finedetail Expected life First cost 10 years 7 years $350,000 $20,000/year +0.01/unit $0.5/unit $15,000/year + 0.55/unit $20,000 $200,000 $10,000/year +0.05/unit $1.25/unit Maintenance Labour $6,500/year+0.95/unit $5,000 Other costs Salvage value Management thinks they will sell about 30,000 replicas per year if there is stability in world governments. If the world becomes very unsettled so that there are frequent governments, sales may be as high as 200,000 units a year. Westmount Waxworks uses a MARR of 15% for equipment projects. (a) Who is the preferred supplier if sales are 30,000 units per year? Use an annual worth (b) Who is the preferred supplier if sales are 200,000 units per year? Use an annual worth comparison. comparison
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