Your company is purchasing a new widget separator. Two alternatives are being considered, as outlined below, Alt. X Alt. Y Initial cost $90,000 $60,000 Annual O&M cost 7,500 9,000 Salvage value 0 5,000 Overhaul (Year 6) 20,000 Not required Life (years) 10 5 If the firm’s interest rate is 7%, which separator should be purchased? What are the savings over the other option? Use Present worth analysis.

Answer rating: 100% (QA)

PWX 90000 7500PA 7 10 0PF 7 10 20000PA 7 4 900... View the full answer