Blue Whale Moving and Storage recently purchased a warehouse building in Santiago. The manager has two good options for moving pallets of stored goods in and around the facility. Alternative 1 includes a 4000-pound capacity, electric forklift (P = $−30,000; n = 12 years; AOC = $−1000 per year; S = $8000), and 500 new pallets at $10 each. The forklift operator’s annual salary and indirect benefits are estimated at $32,000. Alternative 2 involves the use of two electric pallet movers (“walkies”) each with a 3000-pound capacity (for each mover, P = $−2000; n = 4 years; AOC = $−150 per year; no salvage) and 800 pallets at $10 each. The two operators’ salaries and benefits will total $55,000 per year. For both options, new pallets are purchased now and every 2 years that the equipment is in use. (a) If the MARR is 8% per year, select the better alternative. (b) Rework using a spreadsheet solution.
Blue Whale Moving and Storage recently purchased
a warehouse building in Santiago. The
manager has two good options for moving pallets
of stored goods in and around the facility. Alternative
1 includes a 4000-pound capacity, electric
forklift (P = $−30,000; n = 12 years; AOC =
$−1000 per year; S = $8000), and 500 new pallets
at $10 each. The forklift operator’s annual salary
and indirect benefits are estimated at $32,000.
Alternative 2 involves the use of two electric
pallet movers (“walkies”) each with a 3000-pound
capacity (for each mover, P = $−2000; n = 4 years;
AOC = $−150 per year; no salvage) and 800 pallets
at $10 each. The two operators’ salaries and
benefits will total $55,000 per year. For both options,
new pallets are purchased now and every
2 years that the equipment is in use. (a) If the
MARR is 8% per year, select the better alternative.
(b) Rework using a spreadsheet solution.
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