Julia must choose between two different designs for a safety enclosure, which will be in use...

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Julia must choose between two different designs for a safety enclosure, which will be in use indefinitely. Model A has a life of three years, a first cost of $8000, and maintenance of $1000 per year. Model B will last four years, has a first cost of $10 000, and has maintenance of $800 per year. A salvage value can be estimated for model A using a depreciation rate of 40 percent and declining-balance depreciation, while a salvage value for model B can be estimated using straight-line depreciation and the knowledge that after one year its salvage value will be $7500. Interest is at 14 percent. Using a present worth analysis, which design is better? Julia must choose between two different designs for a safety enclosure, which will be in use indefinitely. Model A has a life of three years, a first cost of $8000, and maintenance of $1000 per year. Model B will last four years, has a first cost of $10 000, and has maintenance of $800 per year. A salvage value can be estimated for model A using a depreciation rate of 40 percent and declining-balance depreciation, while a salvage value for model B can be estimated using straight-line depreciation and the knowledge that after one year its salvage value will be $7500. Interest is at 14 percent. Using a present worth analysis, which design is better?

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