The brew master at Appalachian Ale has asked you to help choose between two alternatives for a plant expansion.The first choice is a new brew system that costs $180,000 with annual maintenance costs of $17,000,an expected life of 15 years and a required rate of return of 12%.the alternative brew system costs only $98,000,requires $9,000 per year in maintenance,will last only 9 years and has a required return of 10%.Calculate the equivalent annual cost of each system.Based on your results only,which system would you recommend?

Question

Quizplus · Accepted Answer

The Answer of The brew master at Appalachian Ale has asked you to help choose between two alternatives for a plant expansion.The first choice is a new brew system that costs $180,000 with annual maintenance costs of $17,000,an expected life of 15 years and a required rate of return of 12%.the alternative brew system costs only $98,000,requires $9,000 per year in maintenance,will last only 9 years and has a required return of 10%.Calculate the equivalent annual cost of each system.Based on your results only,which system would you recommend?

The Brew Master at Appalachian Ale Has Asked You to Help