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A large cash crop company is planning the purchase of an additional harvester. The key parameters of the three harvesters under scrutiny are provided below.
A large cash crop company is planning the purchase of an additional harvester. The key parameters of the three harvesters under scrutiny are provided below. Parameters ALPHA BETA GAMMA 1. Initial Cost ($) $330,000 $355,000 $375,000 $225,000 at EOY1 increasing by 2% annually to EOY5 $250,000 at EOY1 inclusively; $260,000 at EOY1 decreasing by 1% revenues in EOY5 2. Revenues ($) annually thereafter subsequently increasing by 1% increase by 1% annually thereafter annually to EOY10 [EOY6 revenues =$245,9831 $140,000 at EOY1 $163,500 at EOY1 $190,000 from 3. Operating Costs increasing by 3% increasing by EOY1 to EOY5; annually thereafter. $500 annually $200,000 from ($) thereafter EOY6 to EOY10. 4. End-of-life salvage value ($) $30,000 $0 20,000 5. Useful life (years) 5 years 10 years 10 years All parameter values are fictitious. EOY = End-of-year The industry standard for these mixers is 4 years MARR = 10%
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