How to determine the least costly alternative

Reference no: EM13204193

Two production lines are under evaluation. One uses waterjet cutting technology and has an initial cost of $100,000 , an annual operating cost of $10,000 , a useful life of 5years, and a salvage value of $70,000 at the end of 5years. The alternative uses mechanical cutting technology and has an initial cost of $85,000 , an annual operating cost of $5,000 , a useful life of 3years, and a salvage value of $25,000 at the end of 3years. Using a present worth analysis with an interest rate of 15% determine the least costly alternative.

Reference no: EM13204193

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