Question

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Check my work 3 Dexcon Technologies, Inc., is evaluating two alternatives to produce its new plastic filament with tribological (i.e., low friction) properties for creating custom bearings for 3-D printers. The estimates associated with each alternative are shown below. Using a MARR of 10% per year, which alternative has the lower present worth? 10 points Method First Cost M&O Cost, per Year Salvage Value Life DDM $-190,000 $-55,000 $4,000 2 years LS $-430,000 $-25,000 $39,000 eBook Hint 4 years Print References The present worth for the DDM method is $ The present worth for the LS method is $ The Click to select)) method is selected.

Answer 1

Life under both methods is different which is 2 years for DDM and 4 years for LS hence we should use LCM method to calculate net worth.

LCM of 2 & 4 is 4 .

Calculation of present worth for DDM method

-190,000-55,000(PVAF@10%,4)-186,000(PVF@10%,2)+4000(PVF@10%,4)

=-$190,000-$55000*3.1698-186000*0.8264+4000*0.6830

= -190000 - 174,339 - 153,710.4 + 2732

= -$515,317.4(PW of DDM method)

Calculation of present worth for LS method

= -$430,000 - 25,000(PVAF@10%,4) +39000(PVF@10%,4)

= -$430,000 -25000*3.1698 +39000*0.6830

=-430,000-79245 + 26,637

=-$482608(PW of LS Method)

Decision: PW of LS method is lower hence LS method should be selected.

Method to be selected - LS method.