Question: An equipment alternative is being economically evaluated separately by three engineers at Raytheon. The first cost will be $77,000, and the life is estimated at

An equipment alternative is being economically evaluated separately by three engineers at Raytheon. The first cost will be $77,000, and the life is estimated at 6 years with a salvage value of $10,000. The engineers disagree, however, on the estimated revenue the equipment will generate. Joe has made an estimate of $10,000 per year. Jane states that this is too low and estimates $14,000, while Carlos estimates $18,000 per year. If the before-tax MARR is 8% per year, use PW to determine if these different estimates will change the decision to purchase the equipment.


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