Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 43

Chem-Tex Chemical is considering two additives for improving the dry-weather stability of its low- cost acrylic paint. Additive A has a first cost of $110,000 and an annual operating cost of $60,000. Additive B has a first cost of $175,000 and an annual operating cost of $35,000. If the company uses a 3-year recovery period for paint products and a MARR of 20% per year, which process is economically favored Use an incremental ROR analysis.