Your Firm, Crapshooter Construction (CC) is constructing a Brunton snowboard factory outside of Park City, Utah and the contract stipulates that CC provides the equipment to fabricate the boards. You have been asked by Brunton executives to analyze three alternative pieces of equipment, and help select the best alternative from a cost perspective.

Alternative A has a first cost of $49,500 and would provide tax benefits of $7,000 per year and a salvage value of $25,000. Operating costs for alternative A will be $1,500 per year and maintenance costs will be $2,500 per year.

Alternative B has a first cost of $38,000 and would provide tax benefits of $3,000 per year and a salvage value of $15,000. Operating costs for alternative B will be $3,000 per year and maintenance costs will be $2,500 per year.

Alternative C has a first cost of $52,500 and would provide tax benefits of $7,500 per year and a salvage value of $25,000. Operating costs for alternative C will be $1000 per year and maintenance costs will be $1500 per year.

The lifetime of all the machines is 25 years. Assuming a 6.50% interest rate, which machine should you select? Show your work for each alternative.

The (incomplete) table below may be of assistance. Alternative A Alternative B Alternative C Benefits Taxes $7,000 per year $25,000 Salvage Value Costs First CostS49,500 (present) Operating Expenses $1,500 per year Maintenance Costs$2,500 per year Lifetime 20 years B/C ratio for Alt A Benefits Cost