Solve the following problems on replacement analysis, comparing alternatives and depreciation. Please solve the problem MANUALLY.

A company is planning to install a new automated plastic-molding press. Four different presses are available.

Assume that each press has the same output capacity (120,000 units per year) and has no market value at

the end of its useful life; the selected analysis period is ?ve years; and any additional capital invested is

expected to earn at least 10% per year. Which press should be chosen if 120,000 non-defective units per

year are produced by each press and all units can be sold? The selling price is $0.375 per unit. Solve.

The initial capital investments and annual expenses for these four mutually exclusive alternatives are as

follows:

Press P1 P2 P3 P4 Capital investment $24,000 $30,400 $49,600 $52,000 Useful life (years) 5 5 5 5 Annual expenses Power 2,720 2,720 4,800 5,040 Labor 26,400 24,000 16,800 14,800 Maintenance 1,600 1,800 2,600 2,000 Property taxes and insurance 180 608 992 1,040 Total annual expenses $31,200 $29,128 $25,192 $22,880