The final answer should be -$409,894 Alternative Comparison-Different Lives 5.17

Question

The final answer should be -$409,894

Alternative Comparison-Different Lives 5.17 Dexcon Technologies, Inc. is evaluating tw natives to produce its new plastie filame aler. tribological (i.e., low friction) properties fo W ing custom bearings for 3-D printers. mates associated with each alternative a eu, below. Using a MARR of 20% per year, w ternative has the lower present worth? The e. which al. DDM 164.000 -55,000 LS Method First cost, S M&O; cost, S/year Salvage value, $ Life, years -3700 -21,0 0 30.0(

Explanation / Answer

Present worth (PW) of both alternatives are computed as follows.

Alternative LS has lower PW.

Note: The slight difference in PW value is due to rounding off.

DDM Year Cash Flow ($) PV Factor @20% Discounted Cash flow ($) (A) (B) (A) x (B) 0 -1,64,000 1.0000 -1,64,000 1 55,000 0.8333 45,833 2 55,000 0.6944 38,194 PW ($) = -79,972 DDM Year Cash Flow ($) PV Factor @20% Discounted Cash flow ($) (A) (B) (A) x (B) 0 -3,70,000 1.0000 -3,70,000 1 -21,000 0.8333 -17,500 2 -21,000 0.6944 -14,583 3 -21,000 0.5787 -12,153 4 9,000 0.4823 4,340 PW ($) = -4,09,896

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