You must recommend one of two machines into an upgraded manufacturing line. You obtain estimates from salespeople from two companies. Salesman A gave the estimates in constant-value dollars, while salesman B provided in future (then-current) dollars. The company's MARR is equal to the real rate of return of 20% per year, and inflation is estimated at 4% per year. Use present worth analysis to determine which machine the engineer should recommend. A $ 140,000 $ 25,000 B First Cost $150,000 $ 43,000 Annual Cost Life (years) 10 10

You must recommend one of two machines into an upgraded manufacturing line. You obtain estimates from salespeople from two companies. Salesman A gave the estimates in constant-value dollars, while salesman B provided in future (then-current) dollars. The company's MARR is equal to the real rate of return of 20% per year, and inflation is estimated at 4% per year. Use present worth analysis to determine which machine the engineer should recommend. A $ 140,000 $ 25,000 B First Cost $150,000 $ 43,000 Annual Cost Life (years) 10 10

Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)

5th Edition

ISBN:9781305084766

Author:Saeed Moaveni

Publisher:Saeed Moaveni

Chapter20: Engineering Economics

Section: Chapter Questions

Problem 25P

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