You have been asked to evaluate two alternatives, X and Y, that may increase plant capacity for manufacturing high-pressure hydraulic hoses. The parameters associated with each alternative have been estimated. Which one should be selected on the basis of a present worth comparison at an interest rate of 12% per year? Why is yours the correct choice?

Alternatlve First cost, $ Maintenance cost, $/year Salvage value, $ -45,000 -58,000 -4,000 -8,000 2,000 12,000 5 Life, years