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  3. 2. if produced by method a, a product’s ini

2. If produced by Method A, a product’s initial capital cost will be $100,000, its operating...

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Mechanical Engineering

2. If produced by Method A, a product’s initial capital costwill be $100,000, its operating cost will be $20,000 per year, andits salvage value after 3 years will be $20,000. With Method Bthere is a first cost of $150,000, an operating cost of $10,000 peryear, and a $50,0000 salvage value after its 3-year life. Based ona present worth analysis at a 15% interest rate, which methodshould be used?

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