Engineering is considering three alternatives to satisfy an OSHA requirement for safety gates in the machine shop. Each gate will completely satisfy the requirement, so no combinations need to be considered. The first costs, operating costs, and salvage values over a 5-year planning horizon are shown below. End of Year Gate 1 Gate 2 Gate 3 0 -$15,000 -$19,000 -$24,000 1 -$6,500 -$5,600 -$4,000 2 -$6,500 -$5,600 -$4,000 3 -$6,500 -$5,600 -$4,000 4 -$6,500 -$5,600 -$4,000 5 -$6,500 + $0 -$5,600 + $2,000 -$4,000 + $5,000 What is the future worth of each alternative?
Engineering is considering three alternatives to satisfy an OSHA requirement for safety gates in the machine shop. Each gate will completely satisfy the requirement, so no combinations need to be considered. The first costs, operating costs, and salvage values over a 5-year planning horizon are shown below. End of Year Gate 1 Gate 2 Gate 3 0 -$15,000 -$19,000 -$24,000 1 -$6,500 -$5,600 -$4,000 2 -$6,500 -$5,600 -$4,000 3 -$6,500 -$5,600 -$4,000 4 -$6,500 -$5,600 -$4,000 5 -$6,500 + $0 -$5,600 + $2,000 -$4,000 + $5,000 What is the future worth of each alternative?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The management of Brawn Engineering is considering three alternatives to satisfy an OSHA requirement for safety gates in the machine shop. Each gate will completely satisfy the requirement, so no combinations need to be considered. The first costs, operating costs, and salvage values over a 5-year planning horizon are shown below.
|
End of Year |
Gate 1 |
Gate 2 |
Gate 3 |
|---|---|---|---|
|
0
|
-$15,000 | -$19,000 | -$24,000 |
|
1
|
-$6,500 | -$5,600 | -$4,000 |
|
2
|
-$6,500 | -$5,600 | -$4,000 |
|
3
|
-$6,500 | -$5,600 | -$4,000 |
|
4
|
-$6,500 | -$5,600 | -$4,000 |
|
5
|
-$6,500 + $0 | -$5,600 + $2,000 | -$4,000 + $5,000 |
What is the future worth of each alternative?
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