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2. You were asked by the Manager of Engineering to propose a solution for a current production line problem. After analyzing the issues, your team

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2. You were asked by the Manager of Engineering to propose a solution for a current production line problem. After analyzing the issues, your team came up with two solutions Solution A would initially cost $90,000, have annual O&M costs of $22,000 and will generate annual savings of $48,000, while solution B will need an initial $62,000, $17.000 for annual O&M costs, and will generate annual savings of $36,000. Both will have salvage values. $15,000 for solution A, and $10,000 for B. Your company's marginal income tax rate is 40%, and its MARR is 10%. Both solutions will alue the problem for the next five years. The proposed equipment for both options is subject to a five-year MACRS property class. Answer the following questions: a) Which option would you recommend? Show the work that backs your choice using the Income and Cash Flow statements. b) What value of MARR would make each solution break even? c) What would be the amount of additional revenue that Solution A should generate to make the Manager of Engineering indifferent to the choice between the two options

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