Question
The following annual costs are associated with three new extruder machines being considered for use in a Styrofoam cup plant: Data X X-TRUD SUPR-X Useful
The following annual costs are associated with three new extruder machines being considered for use in a Styrofoam cup plant:
| Data | X | X-TRUD | SUPR-X |
| Useful Life, Years | 5 | 13 | 11 |
| First Cost | $2,300,000 | $2,660,000 | $2,250,000 |
| Salvage Value | $105,000 | $88,000 | $91,000 |
| Annual Benefit | $95,000 | $681,000 | $731,000 |
| M&O | $75,000 | $70,000 | $68,000 |
| M&O Gradient | $11,000 | $15,500 | $13,500 |
The company's interest rate (MARR) is 21%. Which extruder should the Styrofoam company choose? Use Annual Cash Flow Analysis and provide the right reason.
A. Choosing SUPR-X is best because it has the highest Annual Benefit
B. Choosing SUPR-X will maximize the EUAB-EAUC; its value is $210,610 higher than X and $83,938 higher than X-TRUD.
C. Choosing SUPR-X is best because it has the lowest M&O cost in yr1
D. Choosing SUPR-X will maximize the EUAB-EAUC; its value is $853,610 higher than X and $135,938 higher than X-TRUD.
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