Question
wo methods can be used to produce expansion anchors. Method A costs $75,000initially and will have a $19,000 salvage value after 3 years. The operating
wo methods can be used to produce expansion anchors. Method A costs $75,000initially and will have a $19,000 salvage value after 3 years. The operating cost with thismethod will be $30,000 in year 1, increasing by $2200 each year. Method B will have afirst cost of $101,000, an operating cost of $7000 in year 1, increasing by $7000 each year,and a $41,000 salvage value after its 3-year life. At an interest rate of 15% per year, whichmethod should be used on the basis of a present worth analysis?
The present worth for method A is $.
The present worth for method Bis $.
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