Which pollution control equipment should be purchased

Reference no: EM132171199

Question - Pollution control equipment must be purchased to remove the suspended organic material from liquid being discharged from a vegetable packing plant. Two alternative pieces of equipment are available that would accomplish the task. A Filterco unit costs $7000 and has a 5-year useful life. A Duro unit, on the other hand, costs $10,000 but will have a 10-year useful life. With inflation, equipment costs are rising at 8% per year, compounded annually, so when the Filterco unit needed to be replaced, the cost would be much more than $7000. Based on a 10-year analysis period, and a 20% minimum attractive rate of return, which pollution control equipment should be purchased?

Reference no: EM132171199

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