Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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222
Chapter 8
8.20 Chem-Tex Chemical is considering two additives
for improving the dry-weather stability of its low-
cost acrylic paint. Additive A has a first cost of
$110,000 and an annual operating cost of $60,000.
Additive B has a first cost of $175,000 and an an-
nual operating cost of $35,000. If the company
uses a 3-year recovery period for paint products
and a MARR of 20% per year, which process
economically favored? Use an incremental ROR
analysis.
is
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Transcribed Image Text:222 Chapter 8 8.20 Chem-Tex Chemical is considering two additives for improving the dry-weather stability of its low- cost acrylic paint. Additive A has a first cost of $110,000 and an annual operating cost of $60,000. Additive B has a first cost of $175,000 and an an- nual operating cost of $35,000. If the company uses a 3-year recovery period for paint products and a MARR of 20% per year, which process economically favored? Use an incremental ROR analysis. is
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