A currently owned shredder used in a refuse-powered electrical generating plant has a present net realizable value of \($210,000\) and is expected to have a market value of \($10,000\) after 4 years. Operating and maintenance disbursements are \($100,000\) per year. An equivalent shredder can be leased for \($200\) per day plus \($80\) per hour of actual use as determined by an hour meter, with both components assumed to be paid at year-end. Actual use is expected to be 1,500 hours and 250 days per year. Using a 4-year planning horizon, a before-tax analysis, and a MARR of 15 percent, determine the preferred alternative using the annual cost criterion.

a. Consider only the above information and use the cash flow approach (insider’s viewpoint approach). 

b. Consider the addition of a third alternative, to operate without any shredder at all, at an annual cost of \($190,000.

Use the cash flow approach (insider’s viewpoint approach). 

c. Consider only the above information and use the opportunity cost approach (outsider’s viewpoint approach).

d. Consider the addition of a third alternative, to operate without any shredder at all, at an annual cost of \($190,000.

Use the opportunity cost approach (outsider’s viewpoint approach).