A Major Defense Supplier Is Planning for the Manufacturing of Its

A major defense supplier is planning for the manufacturing of its Desert Hawk VII Unmanned Aerial Systems, a hand- launched air vehicle that provides intelligence, reconnaissance, and surveillance capabilities. Three manufacturing facilities are under consideration. Each site provides the same manufacturing capability but has different costs to manufacture and transport the system to the customers. The estimated costs are provided in the table below.
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$$\begin{array} { l | c | c | c } \hline \text { lternative } & \text { Texas Plant } & \text { Utah Plant } & \text { MinnesotaPlant } \\\hline \text { t up costs } & \$ 720,000 & \$ 770,000 & \$ 755,000 \\\hline \text { nnualoperating costs } & \$ 27,500 & \$ 22,500 & \$ 24,500 \\\hline \text { alvage Value, at end of year8 } & \$ 420,000 & \$ 430,000 & \$ 445,000 \\\hline \text { ransportationcosts per unit } & \$ 2000 & \$ 2250 & \$ 2300 \\\hline \text { seful lives, years } & 8 & 9 & 10 \\\hline\end{array}$$ $$\begin{array} { l | c | c | c } \hline \text { lternative } & \text { Texas Plant } & \text { Utah Plant } & \text { MinnesotaPlant } \\\hline \text { t up costs } & \$ 720,000 & \$ 770,000 & \$ 755,000 \\\hline \text { nnualoperating costs } & \$ 27,500 & \$ 22,500 & \$ 24,500 \\\hline \text { alvage Value, at end of year8 } & \$ 420,000 & \$ 430,000 & \$ 445,000 \\\hline \text { ransportationcosts per unit } & \$ 2000 & \$ 2250 & \$ 2300 \\\hline \text { seful lives, years } & 8 & 9 & 10 \\\hline\end{array}$$ If the company has to deliver 300 units per year for 8 years, which facility should be selected based on the present worth method? Assume the company uses a MARR of 5% and a study period of 8 years.