Question
Sandersen Meat Processors has asked its lead process engineer to evaluate two different types of conveyors for the beef cutting line. Type A has an
Sandersen Meat Processors has asked its lead process engineer to evaluate two different types of conveyors for the beef cutting line. Type A has an initial cost of $90196 and a life of 4 years. Type B has an initial cost of $ 192418 and a life expectancy of 5 years. The annual operating cost (AOC) for type A is expected to be $ 9459, while the AOC for type B is expected to be $7180. If the salvage values are $7320,6 and $5069 for type A and type B, respectively, Use present worth analysis to select the better method. Assume that i= 10% per year.
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