An engineer must recommend one of two rapid prototyping machines for integration into an upgraded manufacturing line.

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An engineer must recommend one of two rapid prototyping machines for integration into an upgraded manufacturing line. She obtained estimates from salespeople from two companies. Salesman A gave her the estimates in constant-value (today's) dollars, while saleswoman B provided the estimates in future (then-current) dollars. The company's MARR is equal to the real rate of return of 20% per year, and inflation is estimated at 4% per year. Use PW analysis to determine which machine the engineer should recommend.


MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...
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Engineering economy

ISBN: 978-0073376301

7th Edition

Authors: Leland Blank, Anthony Tarquin

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