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The Manager of Cats-N-The-Pond, Inc. is trying to decide between two alternative designs for an aqua-cultural facility. Both facilities produce the same number of fish
The Manager of Cats-N-The-Pond, Inc. is trying to decide between two alternative designs for an aqua-cultural facility. Both facilities produce the same number of fish for sale. The first alternative costs $250,000 to build and has a first-year operating cost of $110,000. Operating costs are estimated to increase by $10,000 per year for each year after the first. The second alternative costs $450,000 to build and has a first-year operating cost of $40,000 per year, escalating at $5000 per year for each year after the first. The estimated life of both plants is 10 years, and each as a salvage value that is 10% of construction cost. Assume an 8% interest rate. Use an equivalent uniform annual cost (EUAC) analysis to determine the EUAC for Alternative 1. Answer range +/- 5, 527.05 (178707.95 - 189762.05)
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