Reference no: EM132767004

Problem 1: John as a senior project manager is looking for a new plant as an expansion project for his company. He has considered two alternatives with the following financial information. In both plants the production capacity is 15 units per day. Project A is for 30 years. Project B will be repeated in the future at the same cost. Calculate the cost of each unit of production for each project assuming 300 days of production per year at an MARR of 12%.

                                            Project A             Project B
Investment                    1,500,000               850,000
annual operation             70,000                      90,000
Salvage                        50,000                     40,000
Annual income tax            30,000                 20,000
service life                    30 years                10 years