Two storage structures, given code names Y and Z, are being considered for a military base located in Sontaga. The military uses a 5 percent/year expected rate of return and a 24-year life for decisions of this type. The relevant characteristics for each structure are shown below.

a. What is the present worth of each machine?

b. What is the decision rule for determining the preferred machine based on present worth ranking?

c. Which structure should be recommended?

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Structure Y Structure Z First Cost $4,500 $10,000 Estimated Life 12 years 24 years Estimated Salvage None $1,800 Value Annual Maintenance $1,000 $720 Cost