Konica Minolta plans to sell a copier that prints documents on both sides simultaneously, cutting in half the time it takes to complete big commercial jobs. The faster copier is expected to increase profit by $2,500,000 per year, regardless of which of the following rollers the company uses in its copiers. The estimated costs associated with chemically treated vinyl rollers and fiber-impregnated rubber rollers are shown below. Determine which of the roller types should be selected on the basis of an ROR analysis assuming the company’s MARR is 25% per year.
 FIGURE 1.png)
Revenue projects; determine i* first. Monetary units are in $1000
Treated vs. DN: 0 = -5000 + (2500 - 1000)(P/A,i*,5) + 100(P/F,i*,5)
= -5000 + 1500(P/A,i*,5) + 100(P/F,i*,5)
i*Trt = 15.7% (spreadsheet)
Impregnated vs. DN: 0 = -6500 + (2500 - 650)(P/A,i*,5) + 200(P/F,i*,5)
= -6500 + 1850(P/A,i*,5) + 200(P/F,i*,5)
i*Imp = 13.7%
Reject treated and impregnated since i* < MARR = 25%
Select DN
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