Y6

KTC Toy Co. is at present spending P400 000.00 annually for the manual operation of its assembly line. To cut costs, three proposals for automation are being considered. Proposal X has an initial equipment cost of P800 000.00, has salvage value of P75 000.00 at the end of six years and results in 65% savings per year on operations cost. Proposal Y costs P500 000.00, has a six-year life, a salvage value of P50 000.00 and results in 50% savings per year. Proposal Z has an initial cost of P300 000.00, a life of three years with no salvage value. With this proposal, a similar replacement will be available for P350 000.00 and a 45% savings in operations is realized. Determine the best alternative using annual worth analysis and an MARR of 14%. (Ans. ATX = P63 060.83; ATY = P77 279.13; ATZ= P42 101.86; Best alternative is Proposal Y) -PLEASE USE AN ACTUAL FORMULA FOR ENGINEERING ECONOMY AND NOT AN EXCEL