Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 55

Holly Farms is considering two environmental chambers to accomplish detailed laboratory confirmations of online bacteria tests in chicken meat for the presence of E. coli 0157:H7 and Listeria monocytogenes. There is some uncertainty about how long the D103 chamber will be useful. A realistic estimate is 3 years, but pessimistic and optimistic estimates of 2 years and 6 years, respectively, are also possible. The estimated salvage value will remain the same. Using an interest rate of 10% per year, determine if any of the D103 estimates would result in a lower cost than that of the 490G chamber for a 6-year planning period.