Harvester Parameters Omega Kappa
Initial Cost $160,000 260,000
Annual revenues $250,000 $280,000 in year 1 increasing by
5% annually thereafter.
Annual costs $170,000 in year 1 270,000
increasing by $20,000 annually thereafter.
End-of-life salvage value $50,000 0
Useful life 4 years 8 years
MARR = 10%
C. Assignment Requirements
C1. Which harvester is better using the Annual Equivalent Worth (AEW) Method?
C2. Which harvester is better using the External Rate of Return (IRR) Method?
C3. Which harvester is better using the Simple Payback Method if the average recovery period (industry threshold) for this category of harvester is 3 years.