Tо reduce spоilаge аt а winery, a Six Sigma prоject team has decided to purchase a new wine fermentation tank and must decide between two tanks. Both tanks have comparable quality levels and the same capacity, but different costs. The team needs to analyze the costs for both tanks over a five-year study period, with an MARR (an interest rate) of 8% per year. Tank 1: The FS-MO Dish Bottom Sealed Base Tank will cost $11,500 now, have operating costs of $500 per year, and have a salvage value of $1,500 after 5 years. Tank 2: The FO Dish Bottom Variable Volume Tank will cost $9,500 now, have operating costs of $1,000 per year, and have a salvage value of $2,500 after 5 years. What is the net present worth of the cash flows for Tank 1? [tank1] The net present worth of the cash flows for Tank 2 is −$11,790. Which tank should the team select? [select]
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