Two methods can be used for producing expansion anchors. Method A costs $80,000 initially
and will have a $15,000 salvage value after 3 years. The operating cost with this method will be
$30,000 per year. Method B will have a first cost of $120,000, and operating cost of $8000 per
year, and a $40,000 salvage value after its 3-year life.
At an interest rate of 12% per year, which
method should be used on the basis of a present worth analysis?