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A manufacturer is exploring changing the raw material transportation system in the production area from a trolley system to a conveyor belt system. The company's
A manufacturer is exploring changing the raw material transportation system in the production area from a trolley system to a conveyor belt system. The company's MARR is 15% per year on its investments and a transportation system will be needed for 15 years. Using present value analysis, what decision would you make?
trolleys (Alt.A) vs conveyor belts (Alt.B)
Initial cost $ 0 $ 35,000
Annual maintenance cost 500 900
Annual labor cost 1500 100
Annual profits 3,000 12,000
Residual value 0 0
Useful life (years) 15 5
Fill in the blanks:
1.The present value of alternative A to do the analysis is $
2. The present value of alternative B to do the analysis is $
3. The selected alternative is Answer
(AoB).
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