The Crockett Land Winery must replace its present grape-pressing equipment. The two alternatives are the Quik-Skwish and the Stomp-Master. The annual operating costs increase by 12% each year as the machines age. If the interest rate is 9%, which press should be chosen?
Quick-Skwish Stomp-Master
First cost $350,000 $500,000
Annual operating costs 28,000 22,500
Salvage value 35,000 50,000
Useful life, in years 5 10