Konica Minolta plans to sell a copier that prints documents on both sides simultaneously, cutting in half the time it takes to complete big commercial jobs. The faster copier is expected to increase...

Konica Minolta plans to sell a copier that prints

documents on both sides simultaneously, cutting

in half the time it takes to complete big commercial

jobs. The faster copier is expected to increase

profit by $2,500,000 per year, regardless of which

of the following rollers the company uses in its

copiers. The estimated costs associated with chemically

treated vinyl rollers and fiber-impregnated

rubber rollers are shown below. Determine which

of the roller types should be selected on the basis

of an ROR analysis assuming the company’s

MARR is 25% per year.

Roller Type Treated Impregnated

First cost, $1000 −5000 −6500

Annual cost, $1000/year −1000 −650

Salvage value, $1000 100 200

Life, years 5 5