Question

UPS Freight plans to spend $100 million on new long-haul tractor-trailers. Some of theses vehicles will include a new shelving design with adjustable shelves to transport iregularly sized freight that requires special handling during loading and unloading.The following two mutually exclusive desingns(A and B) with the cost details in the table below are to be compared for finalselection. Round up your values to the nearest dollar. Factors Design A: Movable shelves 2000 137 827 56 Design B: Adjustable frames 1500 -69 625 26 First Cost (Thousand S) Annual operating Cost (Thousand $ year) Annual Revenue (Thousand Slyear) Salvage Value (Thousand $)

Answer 1

(f) Paybak period = 4 years

(e) The correct answer is C -[ -1500 + ( - 69 (p/a, 10, 4)](f/p, errb,4 ) = 625 (a/f , 10, 4) + 26