Two production lines are under evaluation. One uses waterjet cutting technology

Question

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.

Explanation / Answer

what do you not get? You need to find the net present value of each, then compare them.

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