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Problem 3 10 points Company C is seeking for help to decide this option to choose to upgrade their current bottleneck equipment. There are two

Problem 3 10 points

Company C is seeking for help to decide this option to choose to upgrade their current bottleneck equipment. There are two vendors and one rental option. The cost details are shown in the table below.

Option

Vender R

Vender T

Rental

Initial Cost

75000

125000

0

Annual Operation Cost

28000

12000

52000

Salvage Value

0

30000

0

Estimated Life in Year

2

3

Maximum 3 years

MARR = 10% per year compounded monthly.

  1. Select from the two sales vendors using the LCM and PW analysis.
  2. Determine which of the three options is cheaper over a 3 year study period.

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