Question
Alternative A and Alternative B are being considered for recovering aluminum from garbage. Alternative A - has a capital cost of $100,000, a first year
Alternative A and Alternative B are being considered for recovering aluminum from garbage. Alternative A - has a capital cost of $100,000, a first year maintenance cost of $15,000, with maintenance increasing by $500 per year for each year after the first. Alternative B - has a capital cost of $120,000, a first year maintenance cost of $17,000, with maintenance increasing by $1,000 per year after the first. Revenues from the sale of aluminum are $20,000 in the first year, increasing $2,000 per year for each year after the first.Life of both alternatives is 10 years.There is no salvage value.The before-tax MARR is 10%.Using present worth analysis, determine which alternative is preferred.
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