Baby Doll Shop manufactures wooden parts for dollhouses. The worker is paid $8.10 an hour and, using a handsaw, can produce a year’s required production (1,600 parts) in just eight 40-hour weeks. That is, the worker averages five parts per hour when working by hand. The shop is considering purchasing of a power band saw with associated fixtures, to improve the productivity of this operation. Three models of power saw could be purchased: Model A (the economy version), model B (the high-powered version), and model C (the deluxe high-end version). The major operating difference between these models is their speed of operation. The investment costs, including the required fixtures and other operating characteristics, are summarized as follows:

Production rate    (parts/hour)5101520CategoryByHand ModelA ModelB ModelCLabor hours required (hours/year)32016010780Annual labor cost    (@ $8.10/hour)2,5921,296867648Annual power cost ($) 400420480Initial    investment ($) 4,0006,0007,000Salvage value ($) 400600700Service life (years) 202020

Assume that MARR = 10%.

Are there enough savings to purchase any of the power band saws? Which model is most economical, based on the rate-of-return principle? (Assume that any effect of income tax has been already considered in the dollar estimates.) (Source: This problem is adapted with the permission of Professor Peter Jackson of Cornell University.)