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A European candy manufacturing plant manager must select a new irradiation system to ensure the safety of specific ingredients, while being economical. The two alternatives

A European candy manufacturing plant manager must select a new irradiation system to ensure the safety of specific ingredients, while being economical. The two alternatives available have the following estimates:

System A B
First Cost, $ 145,000 100,000
CFBT, $ per Year 60,000 20,000
Life, Years 3 5

The company is in the 35% tax bracket and assumes classical straight line depreciation for alternative comparisons performed at an after-tax minimum acceptable rate of return (MARR) of 6% per year. A salvage value of zero is used when depreciation is calculated; however, system B can be sold after 5 years for an estimated 14% of its first cost. System A has no anticipated salvage value. Determine which is more economical using an annual worth (AW) analysis worked by hand.

The annual worth analysis for system A is determined to be $ .......??

The annual worth analysis for system B is determined to be $ ........??

System (Click to select) B A is selected.

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