James developed the two cash flow diagrams shown A company that manufactures magnetic membrane
switches is investigating two production options that have the estimated cash flows shown ($1 millionunits). Which one should be selected on the basis of a present worth analysis at 10% per year?
First cost, $ 30 0
Annual cost, $ per year 5 2
Annual income, $ per year 14 3.1
Salvage value, $ 2 —
Life, years 5 5
5