The SaIe-a-matic has a first cost of $1721, annual operating and maintenance cos

Question

The SaIe-a-matic has a first cost of $1721, annual operating and maintenance costs of $524, annual savings of $139, and a salvage value of $370. It has a useful life of 4 years. The Vendometer has a first cost of $3049, annual operating and maintenance costs of $665, annual savings of $331, and a salvage value of $1063. It has a useful life of 3 years. You are asked to decide which system to buy. Using a MARR of 8%, what is the EUAW of the SaIe-a-matic? Enter your answer as 12345 Round your answer. Do not use a dollar sign (''$''), any commas ('',''), or a decimal point (''.'').

Explanation / Answer

We should buy Sale-a-matic as its EUAW is lower than Vendometer.

Financial Evaluation of Sale-a-matic Amount in $ a) First Cost 1721 b) Annual Operating Cost 524 c) Annual Savings 139 d) Net Operating Cost (b-c) per annum 385 e) Useful Life in Years 4 f) Salvage Value 370 g) PV of Net Operating Cost @ 8% 1275 h) PV of Salvage Value 272 i) Total Cost (a+g-h) 2724 EUAW (i/e) 681 Financial Evaluation of Vendometer Amount in $ a) First Cost 3049 b) Annual Operating Cost 665 c) Annual Savings 331 d) Net Operating Cost (b-c) per annum 334 e) Useful Life in Years 3 f) Salvage Value 1063 g) PV of Net Operating Cost @ 8% 861 h) PV of Salvage Value 844 i) Total Cost (a+g-h) 3066 EUAW (i/e) 1022

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