Answer Happy

Polytec Chemical, Inc. must decide between two additives to improve the dry-weather stability of its low- cost acrylic paint. Additive A will have an equipment and installation cost of $136,000 and an annual cost of $55,000. Additive B will have an installation cost of $175,000 and an annual cost of $31,000. If the company uses a five-year recovery period for paint products and an MARR of 30% per year, which process is favored on the basis of an incremental rate of return analysis? Also, determine the value of A/*. The value of A/* is On the basis of an incremental rate of return analysis, process B ✓is favored.
Alternative R has a first cost of $94,000, annual M&O costs of $66,000, and a $20,000 salvage value after 5 years. Alternative S has a first cost of $175,000 and a $64,000 salvage value after 5 years, but its annual M&O costs are not known. Determine the M&O costs for alternative S that would yield a required incremental rate of return of 22%. The M&O cost for alternative S is $