Kiwidale Dairy is considering purchasing a new ice-cream maker. Two models, Smoothie and Creamy, are available and their information is given below. (perform all calculation using 5 significant figures, and give your final answer to 1 decimal place). (a) What is Kiwidale's MARR that makes the two alternatives equivalent? Use a present worth comparison. Smoothie 15,000 12 years 4,700 1,400 2,250 Creamy 40,000 First Cost Service Life Annual profit Annual operating cost Salvage value A MARR which makes the two alternatives equivalent in term of PW is 12 years 12,000 3,720 5,400

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
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Kiwidale Dairy is considering purchasing a new ice-cream maker. Two models, Smoothie and Creamy, are available and their
information is given below. (perform all calculation using 5 significant figures, and give your final answer to 1 decimal place).
(a) What is Kiwidale's MARR that makes the two alternatives equivalent? Use a present worth comparison.
Creamy
First Cost
40,000
Service Life
12 years
Annual profit
12,000
Annual operating cost
3,720
Salvage value
5,400
A MARR which makes the two alternatives equivalent in term of PW is
Smoothie
15,000
12 years
4,700
1,400
2,250
Transcribed Image Text:Kiwidale Dairy is considering purchasing a new ice-cream maker. Two models, Smoothie and Creamy, are available and their information is given below. (perform all calculation using 5 significant figures, and give your final answer to 1 decimal place). (a) What is Kiwidale's MARR that makes the two alternatives equivalent? Use a present worth comparison. Creamy First Cost 40,000 Service Life 12 years Annual profit 12,000 Annual operating cost 3,720 Salvage value 5,400 A MARR which makes the two alternatives equivalent in term of PW is Smoothie 15,000 12 years 4,700 1,400 2,250
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