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b) SKP Corporation requires a chemical finishing process for a product under contract for a period of six years. Three options are available. Neither option
b) SKP Corporation requires a chemical finishing process for a product under contract for a period of six years. Three options are available. Neither option 1 nor option 2 can be repeated after its process life. However, option 3 will always be available from GSP Chemical Corporation at the same cost during the period that the contract is operative. Here are the options: Option 1: Process device A, which costs $110,000, has annual operating and labor costs of $65,000 and a useful service life of four years with an estimated salvage value of $10,000. Option 2: Process device B, which costs $160,000, has annual operating and labor costs of $55,000 and a useful service life of six years with an estimated salvage value of $30,000. Option 3: Subcontract out the process at a cost of $100,000 per year. According the present-worth criterion, which option would you recommend at i = 12%
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