Explain the three different assembly methods

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An electric switch manufacturing company has to choose one of the three different assembly methods. Method A will have a first cost of $40,000, an annual operating cost of 9,000 and a service life of 2 years. Method B will cost $80,000 to buy and will have an annual operating cost of $6000 over its 4-year service life. Method C will cost $130,000 initially with an annual operating cost of $4000 over its 8 year life. Methods A and B will have no salvage value, but Method C will have some equipment worth an estimated $12,000, Which method should be elected? Use present worth analysis at an interest rate of %10 per year.

Reference no: EM13190862

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