Which robot is the better economic option

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PGM Consulting is under contract to Montgomery County for evaluating alternatives that use a robotic, liquid-propelled "pig" to periodically inspect the interior of buried potable water pipes for leakage, corrosion, weld strength, movement over time, and a variety of other parameters. Two equivalent robot instruments are available. Robot Joeboy will have a first cost of $85,000, annual M&O costs of $30,000, and a $40,000 salvage value after 3 years. Robot Watcheye will have a first cost of $125,000, annual M&O costs of $27,000, and a $33,000 salvage value after its 5-year life. Assume an interest rate of 8% per year. (a) Which robot is the better economic option? (b) Using the spreadsheet Goal Seek tool, determine the first cost of the robot not selected in ( a ) so that it will be the economic selection.

Reference no: EM13881642

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