[ayad1971]

The management of Brawn Engineering is considering three alternatives to satisfy OSHA
requirement for safety gates in the machine shop. Each gate will completely satisfy the
requirement, so no combinations need to be considered. The first costs, operating costs, and
salvage values over a 5-year planning horizon are shown below. Using an external rate of returj
analysis with MARR of 20% /year, determine the preferred gate.
End of Year Gate 1 Gate 2 Gate 3
0 -$ 15,000 -$ 19,000 -$ 24,000
1 -$ 6,500 -$ 5,600 -$ 4,000
2 -$ 6,500 -$ 5,600 -$ 4,000
3 -$ 6,500 -$ 5,600 -$ 4,000
4 -$ 6,500 -$ 5,600 -$ 4,000
5 -$ 6,500 + 0 -$5,600 +$ 2,000 -$ 4,000 +$ 5,000

[Curlyben]

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