Appledale Dairy is considering upgrading an old ice-cream maker. Upgrading is available at two levels: moderate and extensive. Moderate upgrading costs $6500 now and yields annual savings of $3300 in the first year, $3000 in the second year, and $2700 in the third year, and so on. Extensive upgrading costs $10 550 and saves $7600 in the first year. The savings then decrease by 20 percent each year thereafter. If the upgraded ice-cream maker will last for seven years, which upgrading option is better? Use a present worth comparison. Apple dale’s MARR is 8 percent.

Answer rating: 100% (QA)

For extensive upgra... View the full answer