Candidate should be selected

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Reference no: EM13151321

Your first assignment as an engineering technology graduate from the University of Houston downtown is to recommend to management which of two equipment candidates should be selected. The two candidates have the following parameters (MARR = 15% per year): 
Candidate X: useful life of 8 years; estimated market value at end of life of $800; annual running expenses of $400; annual revenues produced of $1,600 and an initial installed cost of $4,500. 
Candidate Y: useful life of 10 years; estimated market value at end of life of $1,200; annual running expenses of $500; annual revenues produced of $1,850 and an initial installed cost of $6,000. 
(a) Given all the above factors, which candidate should be selected? 
(b) By how much would the estimated capital investment for the alternate candidate [the candidate not selected above in (a)] have to vary from your first decision in (a)? 
(c) All other factors being the same except the life of Candidate X, what would be the life of Candidate X if the decision is a tossup, that is, no one Candidate has an economic advantage over the other?

Reference no: EM13151321

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