this question is from global engineering economics book ...chapter4 any help is

Question

this question is from global engineering economics book ...chapter4
any help is appreciated.
Angus automotive has $100000 to invest in internal projects. thechoices are


1. lineimprovements          $20000
2. new manualtester          $30000
3. new automatic tester      $60000
4. overhaulingpress          $50000

only one tester may be bought and the press will not needoverhauling if the line improvements are not made. what mutuallyexclusive project combinations are
available if Angus Auto will invest in at least one?

Explanation / Answer

Option A - NewAutomatic Tester Cost of Tester 60,000.00 Overhauling Press 50,000.00 Line Improvements 20,000.00 Total Investment required 130,000.00 But he has only 100000 in hand. Line improvements are not possible without overhauling press. Hence , he can invest only in theautomatic tester. But , he will be left with 40000 Option-B New ManualTester Cost of the Tester 30,000.00 Overhauling Press 50,000.00 Line improvements 20,000.00 Total Investment required 100,000.00 Hence , if he selects the new manual tester , he would be able to overhaul the press & make line improvements . Hence , Select the newManual Tester .

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