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Julia must choose between two different designs for a safety enclosure, which will be in use indefinitely. Model A has a life of three years,
Julia must choose between two different designs for a safety enclosure, which will be in use indefinitely. Model A has a life of three years, a first cost of $15000, and maintenance cost of $2000 per year. Model B will last five years, has a first cost of $22000, and has maintenance cost of $2500 per year. A salvage value can be estimated for model A using a depreciation rate of 30% and declining-balance depreciation, while a salvage value for model B can be estimated using straight-line depreciation and the knowledge that after one year its salvage value will be $18500. Interest rate is at 10% (annually). Using the Annual Worth Analysis, which design is better
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