Dodson Inc. is considering purchasing some new processing equipment. The carbon steel alternative has been quoted at $40,000 initially. It would have an eight-year life with residual salvage of $2,000. The operating costs would be $3,000 per year with a major overhaul at the end of the third and sixth years of $4,000. A more corrosion-resistant alternative to stainless steel is offered at $60,000 with a life of 12 years, an operating expense of $1,500 per year, and no major overhauls.

A) If Dodson desires an ROI of 15%, which is the better alternative? Please provide revenue information for ROI calculation.

B) Should a present worth or annual amount calculation be made?

C) Can IRR/incremental methods be used?