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Problem 17.049: Calculate the after-tax AW of two alternatives A European candy manufacturing plant manager must select a new irradiation system to ensure the safety
Problem 17.049: Calculate the after-tax AW of two alternatives A European candy manufacturing plant manager must select a new irradiation system to ensure the safety of specific ingredients while being economical. The two alternatives available have the following estimates: System First Cost, $ FBT, $ per Year Life, Years 150,000 60,000 3 80,000 20,000 5 The company is in the 35% tax bracket and assumes classical straight line depreciation for alternative comparisons performed at an after-tax minimum acceptable rate of return (MARR) of 8% per year. A salvage value of zero is used when depreciation is calculated; however, system B can be sold after 5 years for an estimated 8% of its first cost. System A has no anticipated salvage value. Determine which is more economical using an annual worth (AW) analysis worked by hand. The annual worth analysis for system A is determined to be $ The annual worth analysis for system B is determined to be $ System (Click to select) is selected
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