A company needs a modern material handling system for facilitating access to and from a busy warehouse. If the companys managementuse a MARR in their economic decisions.The company found two systems, the first system is a second-hand and the second system is a new system. The economic consequences of both systems are given in the below answer the following questions :

PART1: For the second-hand systemalternative:

a)Draw the cash flow for the economic consequences.

b)Find the present worth, annual worth,future worth.

c)Find the internal rate of return.d)Is the system economically justified?(explain why).e)Calculate the simple and discounted payback periods.f)What are the annual savings required for the system to breakeven?

PART 2: Considering the two mutuallyexclusive alternativesand assume permanent need for the system (repeatability assumption).

a)Using any equivalency analysis technique of your choice (PW or FW or AW), whichalternative should the company pick? (explain why)

b)Apply incremental analysis(rate of return technique)to determine the preferred alternative.

c)Determine the unfavorablesystems investment cost at which the company would be indifferent between alternatives. (For example, if when you analyze the problem, you pick the new system, determine the investment cost of the second-hand system that makes it on same level of economic desirability).

MARR Second-hand System Investment cost $63,700 Annual expenses $14,900 16% $30,800 New System $79,200 19300 $37,650 decreasing by 600 each year thereafter 12 years $33,000 Investment cost Annual expenses First year savings Useful life Salvage value Annual savings Useful life Salvage value per year 6 years $28,000