A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $90,000 with $2,500 salvage value after 16 years. The other can be purchased and installed for $130,000 with $5,500 salvage value after 16 years. Operation and maintenance for each is expected to be $14,000 and $15,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Please view the following video before answering this question. Video Example 9.6
A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be
purchased and installed for $90,000 with $2,500 salvage value after 16 years. The other can be purchased and installed for $130,000
with $5,500 salvage value after 16 years. Operation and maintenance for each is expected to be $14,000 and $15,000 per year,
respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes.
Click here to access the TVM Factor Table Calculator
Click here to access the MACRS-GDS table.
Part a
Your answer is partially correct.
Determine which alternative is less costly, based upon comparison of after-tax annual worth.
Alternative 1
Show the AW values used to make your decision:
Conveyor 1: $
21950
Conveyor 2: $
26426
Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is +10.
Tauth aols and Med:e
Transcribed Image Text:Please view the following video before answering this question. Video Example 9.6 A granary has two options for a conveyor used in the manufacture of grain for transporting, filling, or emptying. One conveyor can be purchased and installed for $90,000 with $2,500 salvage value after 16 years. The other can be purchased and installed for $130,000 with $5,500 salvage value after 16 years. Operation and maintenance for each is expected to be $14,000 and $15,000 per year, respectively. The granary uses MACRS-GDS depreciation, has a marginal tax rate of 40%, and has a MARR of 9% after taxes. Click here to access the TVM Factor Table Calculator Click here to access the MACRS-GDS table. Part a Your answer is partially correct. Determine which alternative is less costly, based upon comparison of after-tax annual worth. Alternative 1 Show the AW values used to make your decision: Conveyor 1: $ 21950 Conveyor 2: $ 26426 Carry all interim calculations to 5 decimal places and then round your final answer to the nearest dollar. The tolerance is +10. Tauth aols and Med:e
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