Dexcon Technologies, Inc., is evaluating two alternatives to produce its new pla

Question

Dexcon Technologies, Inc., is evaluating two alternatives to produce its new plastic filament with tribological (i.e., low friction) properties for creating custom bearings for 3-D printers. The estimates associated with each alternative are shown below. Using a MARR of 8% per year, which alternative has the lower present worth?

The present worth for the DDM method is $

Method DDM LS First Cost $-100,000 $-460,000 M&O Cost, per Year $-70,000 $-35,000 Salvage Value $2,000 $33,000 Life 2 years 4 years

Explanation / Answer

Present worth, DDM ($) = - 100,000 - 70,000 x P/A(8%, 2) + 2,000 x P/F(8%, 2)

= - 100,000 - 70,000 x 1.7833** + 2,000 x 0.8573**

= - 100,000 - 124,831 + 1,714.6

= - 223,116.4

Present worth, LS ($) = - 460,000 - 35,000 x P/A(8%, 4) + 33,000 x P/F(8%, 4)

= - 460,000 - 35,000 x 3.3121** + 33,000 x 0.7350**

= - 460,000 - 115,923.5 + 24,255

= - 551,668.5

Since DDM has lower negative PW, DDM method should be selected.

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.