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A company needs a modern material handling system for facilitating access to and from a...

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Accounting

A company needs a modern material handling system for facilitating access to and from a busy warehouse. If the companys management use a MARR in their economic decisions. The company found two systems, the first system is a second-hand and the second system is a new system. The economic consequences of both systems are given in the below table for each group.

a) Draw the cash flow for the economic consequences.

b) Find the present worth, annual worth, future worth.

c) Find the internal rate of return.

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MARR Second-hand System Investment cost $40,500 Annual expenses $14,300 New System Investment cost $104,000 Annual expenses 14,500 $40,000 decreasing by 8% each First year saving year thereafter Useful life 16 years Salvage value $16,000 8.5% per year Annual savings Useful life Salvage value $21,200 8 years $8,000

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