The management of Brawn Engineering is considering three alternatives to satisfy an OSHA requirement for...
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The management of Brawn Engineering is considering three alternatives to satisfy an 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. 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 Show the comparisons and internal rates of return used to make your decision: Comparison 1: Gate 2 versus Gate 1 IRR 1: 1.43 % Comparison 2: Gate 3 versus Gate 1 IRR 2: 1.43 Using an internal rate of return analysis with a MARR of 20%/year, determine the preferred gate. Gate 3 Carry all interim calculations to 5 decimal places and then round your final answer to 1 decimal place. The tolerance is +0.2
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