A manufacture firm estimates that annual profits will increase if a mobile model is built and taken to trade shows to market their product line. A finance and engineering team has looked at the issue and has developed two options: A large model at a cost of $105,000, and it should increase annual profits by $31,000. A small model for $55,000, but it will only increase annual profits by $12,000. The salvage value for the large model is $5000 more than the small model after their common useful life of 5 years, and it costs $1000 more a year to transport to the trade shows. The firm has a MARR of 12%. Use AW incremental analysis to make a recommendation on which option should be chosen.

Answer rating: 100% (QA)

Answer and step by step explanation The recommendation for the manufacture firm should be to choose ... View the full answer