SUBJECT: ENGINEERING ECONOMY TOPIC: BASIC METHODS IN MAKING ECONOMY STUDIES

NOTES:

• USE 2 DECIMAL PLACES ONLY
• BOX THE FINAL ANSWERS
• SHOW DETAILED SOLUTION (GIVEN, WHAT IS BEING ASKED, FORMULA TO BE USED, SOLUTIONS, ANSWER)
• PLEASE HAVE A CLEAR AND UNDERSTANDABLE SOLUTIONS

A company is considering two types of equipment for Its manufacturing plant. Pertinent data are as follows: Type 1 Type 2 First coat 300.000 500.000 Additional Investment after 3 years 100.000 T5.000 Salvage Value 30.000 50.000 Annual operating cost 45.000 33.000 Annual labor cost 50.000 45.000 Insurance and property taxes 3% 3% Payroll taxes 4% 4% Estimated life 15 15 If the rate is 15%. which equipment should be selected on the basis of comparing their Individual Present Worth