14. A company is considering the purchase of one of two brands of supercomputers. The data on each are given subsequently.

ENGR.ECONOMIC ANALYSIS
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Author:NEWNAN
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Chapter1: Making Economics Decisions
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14. A company is considering the purchase of one of two brands of supercomputers. The data
on each are given subsequently.
Initial cost ($)
Service life (years)
Salvage value ($)
Net annual software cost ($)
Brand A
3,400,000
3
100,000
2,000,000
If the MARR is 12%, which alternative should be selected using
(a) Present worth comparison.
(b) Annual equivalent comparison.
(c) Incremental rate-of-return comparison.
Brand B
6,500,000
6
500,000
1,800,000
Transcribed Image Text:14. A company is considering the purchase of one of two brands of supercomputers. The data on each are given subsequently. Initial cost ($) Service life (years) Salvage value ($) Net annual software cost ($) Brand A 3,400,000 3 100,000 2,000,000 If the MARR is 12%, which alternative should be selected using (a) Present worth comparison. (b) Annual equivalent comparison. (c) Incremental rate-of-return comparison. Brand B 6,500,000 6 500,000 1,800,000
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