Answered step by step
Verified Expert Solution
Question
1 Approved Answer
new concrete testing equipment given below. Draw the cash flow diagram for each and assume your company's MARR is 5%. Using a present value comparison
new concrete testing equipment given below. Draw the cash flow diagram for each and assume your company's MARR is 5%. Using a present value comparison which alternative do you Your company has two alternatives to consider for purchasing Details of each alternative are recommend? Alternative A: Concrete International will sell your company an instrument set which has 2 fixed location analysis test units and 5 portable analysis test units. The portable units will relay information digitally to the fixed units through a wireless service. The life of the units is expected to be 10 years with some required upgrades. The initial cost of the instrument set is $63,000 and a software upgrade of $5,300 is required in year 5. Additionally annual calibration costs will start at $900 in year 1 and are estimated to increase $300 every year. These units will allow the company to gain business income through testing services estimated to be $17,500 in year 1, then $20,000 in year 2, then increasing $5,000 per year through year 10. At the end of their 10 year life, the instrument set is estimated to have a salvage/resale value of $6,000. The wirel rvice will cost $500 per year every year Alternative B: Quality Test Tools is another vendor who has offered a package instrument deal In this alternative 1 fixed location analysis test unit and 4 portable analysis test units will be provided. Information from the portable units must be transferred to the fixed unit by removing a portable hard drive from the portable unit and connecting it to the fixed location unit. The life of the units is expected to be 10 years and no upgrades will be required. The initial cost of the instrument set is $38,500. The hard drives will need to be replaced in year 4 (estimated cost of $4,000) and again in year 8 (estimated cost of $4,400). Calibration costs will be $1,200 every 2 years beginning in year 2. These units will allow the company to gain business income through testing services estimated to be $14,000 in year 1, then $16,500 in year 2, then increasing $3,000 per year through year 10. At the end of their 10 year life, the instrument set is estimated to have a salvage/resale value of $0. new concrete testing equipment given below. Draw the cash flow diagram for each and assume your company's MARR is 5%. Using a present value comparison which alternative do you Your company has two alternatives to consider for purchasing Details of each alternative are recommend? Alternative A: Concrete International will sell your company an instrument set which has 2 fixed location analysis test units and 5 portable analysis test units. The portable units will relay information digitally to the fixed units through a wireless service. The life of the units is expected to be 10 years with some required upgrades. The initial cost of the instrument set is $63,000 and a software upgrade of $5,300 is required in year 5. Additionally annual calibration costs will start at $900 in year 1 and are estimated to increase $300 every year. These units will allow the company to gain business income through testing services estimated to be $17,500 in year 1, then $20,000 in year 2, then increasing $5,000 per year through year 10. At the end of their 10 year life, the instrument set is estimated to have a salvage/resale value of $6,000. The wirel rvice will cost $500 per year every year Alternative B: Quality Test Tools is another vendor who has offered a package instrument deal In this alternative 1 fixed location analysis test unit and 4 portable analysis test units will be provided. Information from the portable units must be transferred to the fixed unit by removing a portable hard drive from the portable unit and connecting it to the fixed location unit. The life of the units is expected to be 10 years and no upgrades will be required. The initial cost of the instrument set is $38,500. The hard drives will need to be replaced in year 4 (estimated cost of $4,000) and again in year 8 (estimated cost of $4,400). Calibration costs will be $1,200 every 2 years beginning in year 2. These units will allow the company to gain business income through testing services estimated to be $14,000 in year 1, then $16,500 in year 2, then increasing $3,000 per year through year 10. At the end of their 10 year life, the instrument set is estimated to have a salvage/resale value of $0
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started