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The Pure Flour Company is analyzing the purchase of additional plansifters to meet increased flour sales during the COVID-19 pandemic. The key parameters of three
The Pure Flour Company is analyzing the purchase of additional plansifters to meet increased flour sales during the COVID-19 pandemic. The key parameters of three plansifters under scrutiny are provided below. Parameters Alpha Beta Gamma 1. Initial Cost ($) $310,000 425,000 440,000 $196,000 at $450,000 at $140,000 at EOY1 EOY1 EOY1 2. Revenues ($) increasing by 3% decreasing by decreasing by annually $2,000 annually 2% annually thereafter thereafter thereafter $375,000 at $100,000 at $60,000 at EOY1 EOY1 EOY1 increasing 3. Operating increasing by decreasing by Costs $1,000 annually by $3,000 $10,000 annually ($) thereafter annually thereafter thereafter 4. End-of-life salvage value $20,000 $0 ($15,000) ($) 5. Useful life 5 years 10 years 10 years (years) All parameter values are fictitious. . EOY = End-of-year Industry Standard = 4 years MARR = 10% ($) = negative dollar value O . 4. Alpha's Annual Equivalent Worth (AEW). 5. Beta's AEW over 30 years it was repeated several times with constant parameter values). 6. The best plansifter based on the NPW decision criterion. 7. The best plansifter based on the AEW decision criterion. 8. . Alpha's project balance after 2 years based on the simple payback decision criterion. 9. Gamma's project balance after 3 years based on the simple payback decision criterion. 10. Beta's recovery period (years) based on the discounted payback decision criterion
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