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The factory manager is considering the following two quotes from two vendors for purchace and maintanance of an equipment. Vendor Xs estimates are all in
The factory manager is considering the following two quotes from two vendors for purchace and maintanance of an equipment. Vendor Xs estimates are all in actual dollars, while Vendor Y's estimates are all in year-zero dollars. Vendor X Vendor y Initial cost $9,200 $11,600 Annual cost $4,900 $4,000 Service life (yrs) 10 10 Salvage value $3,680 $4,640 The manager uses a before-tex real interest rate of 10% per year for economic analysin. It inflation rate is expected to average 4.55% per year over the next ten years, which vendor should the manager select that will minimize the before-tax cost of owniwership? (a) Calculato PW for each alternative (uno negative sign for costs) The PW of Vendor X's estimates in (Round to the nearest whole number) Tho PW of Vendor Ys ontimates is $(Round to the nearest whole number) (b) The most economical alternative is O A Vendor X OB Vendor Y
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