ABC Beverage, LLC purchases its 355-ml cans in large bulk from Wald-China Can Corporation. The finish on the anodized aluminum surface is pro­duced by mechanical finishing technologies called brushing or bead blasting. Engineers at Wald are switching to more efficient, faster, and cheaper ma­chines to supply ABC. Use the estimates and MARR = 8% per year to select between the two alternatives.

Brush alternative: P = $?400,000; n = 10 years; S = $50,000; non-labor AOC = $?60,000 in year 1, decreasing by $5000 annually starting in year 2
Bead blasting alternative: P = $?400,000; n is large, assume permanent; no salvage; non-labor AOC = $?70,000 per year


AWbrush = -400,000(A/P,8%,10) + 50,000(A/F,8%,10)
- [60,000 - 5000(A/G,8%,10)]
= -400,000(0.14903) + 50,000(0.06903) – 60,000 + 5000(3.8713)
= $-96,804

AWblast = -400,000(0.08) – 70,000
= $-102,000

Select brush alternative

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