Question
Your company is considering adding a new packaging line to increase capacity. There are 3 different configurations that will meet your design requirements, so your
Your company is considering adding a new packaging line to increase capacity. There are 3 different configurations that will meet your design requirements, so your management must evaluate from among this set of three mutually exclusive alternatives. Initial capital investment, revenues, and annual expenses for each alternative are given in the table below, along with the end of life market value. Using a MARR of 10%, which packaging line should be chosen?
| Packaging Line | ||
| 1 | 2 | 3 |
Investment | $100,000 | $115,000 | $200,000 |
Revenue | $45,000 | $60,000 | $85,000 |
Useful Life | 10 Years | 10 Years | 10 Years |
Total Annual Expense | $20,000 | $30,000 | $40,000 |
Market Value | $20,000 | $25,000 | $30,000 |
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