Question
A production plant manager has been presented with two proposals for automating an assembly process.Proposal A involves an initial cost of $15,000 and an annual
A production plant manager has been presented with two proposals for automating an assembly process.Proposal A involves an initial cost of $15,000 and an annual operating cost of $2,000 per year for the next four years.Thereafter, the operating cost is expected to be $2,700 per year.This equipment is expected to have a 20 year-life with no salvage value.Proposal B requires an initial investment of $28,000 an annual operating cost of $1,200 per year for the first 3 years.Thereafter, the operating cost is expected to increase by $120 per year.This equipment is expected to last 20 years and has a $2,000 salvage value.If the company's minimum attractive rate is 15%, Draw the Cash Diagram and Define the Economic Symbols clearly?
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