Question: Chem-Tex Chemical is considering two additives for improving the dry-weather stability of its low-cost acrylic paint. Additive A has a first cost of $110,000 and

Chem-Tex Chemical is considering two additives for improving the dry-weather stability of its low-cost acrylic paint. Additive A has a first cost of $110,000 and an annual operating cost of $60,000. Additive B has a first cost of $175,000 and an annual operating cost of $35,000. If the company uses a 3-year recovery period for paint products and a MARR of 20% per year, which process is economically favored? Use an incremental ROR analysis.

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