Check my work Dexcon Technologies, Inc., is evaluating two alternatives to produ
ID: 1138769 • Letter: C
Question
Check my work Dexcon Technologies, Inc., is evaluating two alternatives to produce its new plastic filament with tribological (i.e., low friction) properties for creating custom bearings for 3-D printers. The estimates associated with each alternative are shown below. Using a MARR of 15% per year, which alternative has the lower present worth? Method First Cost M&O Cost, per Year Salvage Value Life DDM $-200,000 $-40,000 $2,000 2 years LS $-500,000 $-40,000 $21,000 4 years The present worth for the DDM method is $ The present worth for the LS method is $ Thi (Click to select)method is selected. LS DDMExplanation / Answer
The minimum rate of return is 15% and the costs are adding to negative worth while the salvage value is adding to positive worth using each method.
Total worth using the DDM method = -$200000 + $(-40000*2) + $2000 = - $ 278000
Present worth using DDM = -278000 ( 1 - 15/100 )2 = - $200855
Total worth using the LS method = -$500000 + (-$40000*5) + 21000 = - $679000
Present wworth using LS method = - 679000 (1 - 15/100)5 = - $301275.9
DOM method gives a lower neagative present worth. So, LS method gives a lower present worth.,