2. Blue Whale Moving and Storage recently purchased a warehouse building in Santiago. The manager has two good options for moving pallets of stored goods in
and around the facility. Alternative 1 includes a 4000-pound capacity, electric forklift
(P = $-30,000; n = 12 years; AOC = $-1000 per year; S = $8000), and 500 new pallets
at $10 each. The forklift operator's annual salary and indirect benefits are estimated
at $32,000. Alternative 2 involves the use of two electric pallet movers (“walkies")
each with a 3000-pound capacity (for each mover, P = $-2000; n = 4 years; AOC =
$-150 per year; no salvage) and 800 pallets at $10 each. The two operators' salaries
and benefits will total $55,000 per year. For both options, new pallets are purchased
now and every 2 years that the equipment is in use. (a) If the MARR is 8% per year,
select the better alternative.