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You have been asked to evaluate two alternatives, X and Y, that may increase plant capacity for manufacturing high-pressure hydraulic hoses
You have been asked to evaluate two alternatives, X and Y, that may increase plant capacity for manufacturing high-pressure hydraulic hoses. The parameters associated with each alternative have been estimated. Which one should be selected on the basis of a present worth comparison at an interest rate of 11% per year? Why is yours the correct choice?
'Alternative X Y '
First Cost $-35,000 $-90,000
Maintenance cost, per Year $-15000 $-2000 '
Salvage Value $4,500 $5,500 '
Life 5 years 5 years
The present worth of alternative X is $......... and that of alternative Y is $ ...........
Alternative ..........is selected by the company.
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