Leonard, a company that manufactures explosion-proof motors, is considering two alternatives for expanding its international export
capacity. Option 1 requires equipment purchases of $720000 now and $420000 two years from now, with annual M&O costs
of $58000 in years 1 through 10. Option 2 involves subcontracting some of the production at costs of $220000 per year beginning
now through the end of year 10. Neither option will have a significant salvage value. Use a present worth analysis to determine which
option is more attractive at the company's MARR of 14.00% per year. (Include a minus sign if necessary.)
The present worth of option 1 is $
O and that of option 2 is $
이
Option 1
✔ is more attractive.
