-A firm is trying to decide which of two alternate weighing scales it should install to...

   

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-A firm is trying to decide which of two alternate weighing scales it should install to check a package filling operation in the plant. The scales would allow better control of the filling operation and result in less overfilling. Both scales last six years. Atlas scales cost $2000 now, benefit the company $450 per year, and at the end of 6 years can be sold for $100 as scrap. Similarly, Tom Thumb scales for $3000, benefit the company $600 per year, and have scrap value of $700 at the end of six years. Assuming an 8% interest rate, a) What is the net present value of each alternative? b) Which scale should be purchased, if either? -A firm is trying to decide which of two alternate weighing scales it should install to check a package filling operation in the plant. The scales would allow better control of the filling operation and result in less overfilling. Both scales last six years. Atlas scales cost $2000 now, benefit the company $450 per year, and at the end of 6 years can be sold for $100 as scrap. Similarly, Tom Thumb scales for $3000, benefit the company $600 per year, and have scrap value of $700 at the end of six years. Assuming an 8% interest rate, a) What is the net present value of each alternative? b) Which scale should be purchased, if either?

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This question pertains to the analysis of two different investments in weighing scales based on their net present value NPV To answer the parts a and ... View the full answer