Which process is economically favored

Reference no: EM132019940

Question: Northern Chemicals is considering two additives for improving the dry-weather stability of its low-cost acrylic paint:

Additive ‘A' has a first cost of $50,000 and an annual operating cost of $18,000.

Additive ‘B' has a first cost of $75,000 and an annual operating cost of $8,500.

If the company uses a 5-year recovery period for paint products and a MARR of 16% per year, which process is economically favored? Use an incremental ROR analysis.

Reference no: EM132019940

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