Present worth comparison, Appledale Dairy is considering

Present worth comparison

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Reference no: EM131091417

Appledale Dairy is considering upgrading an old ice-cream maker. Upgrading is available at two levels: moderate and extensive. Moderate upgrading costs $6500 now and yields annual savings of $3300 in the first year, $3000 in the second year, $2700 in the third year, and so on. Extensive upgrading costs $10 550 and saves $7600 in the first year. The savings then decrease by 20 percent each year thereafter. If the upgraded icecream maker will last for seven years, which upgrading option is better? Use a present worth comparison. Appledale’s MARR is 8 percent.

Reference no: EM131091417

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