A business firm is contemplating the installation of a material handling system, and two designs are being considered. The first design is an automated guided vehicle system (AGVS). THE second design is a pallet conveyor system The estimated costing data for the two systems are shown below;
AGVS (000) Conveyor (000)
Initial cost 280 360
Annual operating costs 50 35
The estimated salvage values are;
Year AGVS (000) Conveyor(000)
1 230 300
2 185 245
3 145 200
4 110 160
5 80 125
A MARR of 10% is used.
1. Using a PV technique, determine the breakeven value for the planning horizon.