A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $50,000 with $4,500 salvage value after 16 years. The other can be purchased and installed for $95,000 with $6,000 salvage value after 16 years. Operation and maintenance for each is expected to be $14,500 and $17,500 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 25%, and has a MARR of 9% after taxes.

A) Determine which alternative is less costly, based upon comparison of after-tax annual worth.

Show the AW values used to make your decision:

Conveyor 1: $ ?

Conveyor 2: $ ?

B) What must the cost of the second (more expensive) conveyor be for there to be no economic advantage between the two?

Cost of the second conveyor: $ ?