Answer to Question #273168 in Civil and Environmental Engineering for Alan Enrico V Tuib

Question #273168

If produced by Method A, a product’s initial capital cost will be $100,000, its operating cost will be


$20,000 per year, and its salvage value after 3 years will be $20,000. With Method B there is a first cost


of $150,000, an operating cost of $10,000 per year, and a $50,000 salvage value after its 3-year life.


Based on a present worth analysis at a 15% interest rate, which method should be used?

1
Expert's answer
2021-11-30T14:32:03-0500

Both methods with their table are given below:





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