2. Smart Manufacturing Company is planning to reduce its labor costs by automating a critical task that is currently performed manually. The automation requires the installation of a new machine. The cost to purchase and install a new machine is Gh¢15,000. The installation of machine can reduce annual labor cost by Gh¢4,200. The life of the machine is 15 years. The salvage value of the machine after fifteen years will be zero. The required rate of return of Smart Manufacturing Company is 25%. Should Smart Manufacturing Company purchase the machine?

2. Smart Manufacturing Company is planning to reduce its labor costs by automating a critical task that is currently performed manually. The automation requires the installation of a new machine. The cost to purchase and install a new machine is Gh¢15,000. The installation of machine can reduce annual labor cost by Gh¢4,200. The life of the machine is 15 years. The salvage value of the machine after fifteen years will be zero. The required rate of return of Smart Manufacturing Company is 25%. Should Smart Manufacturing Company purchase the machine?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

See similar textbooks

Similar questions

You have two machines under consideration for an improved automated wrapping process for Snickers Fun Size candy bars as detailed below. Compare them on the basis of annual worths at i= 10% . Machine First Cost Annual Cost per Year Salvage Value Life C D $-50,000 $-7,000 $7,000 $-55,000 $-12,000 $18,000 3 years 6 years Machine (Click to select) v Eis selected for an improved automated wrapping process. (Click to select) D
An adoption of a new system will lead to a reduction of the cost by as much as 20%. The cost of the new system is PhP111,486 once installed and the annual charges for taxes and insurance is 10% of the initial cost. Without he new system, the cost currently incurred is PhP230,657. If the new system will have no worth after 10 years of use, and a mínimum return of 9% desíred, compute for the rate of return.
Allbest airlines has 100 planes. Planes break down anaverage of twice a year and take one week to fix. Assumingthe times between breakdowns and repairs are exponential,how many repairmen are needed to ensure that there is atleast a 95% chance that 90 or more planes are available?
Situation A: If a person lives for 3 years with a disease and the current standard of care for that disease means he/she lives with a utility level of 0.7 .-What is the QALY? If that person takes a new medicine (Medicine A) because of which his/her utility level increases to 0.8,-What will be the new QALY? Calculate the benefit of new medicine. Situation C: if another new medicine (Medicine B) prolongs the patient’s life by 2 years, at a utility level of 0.7,-Calculate the new QALY
Merrimac Manufacturing Company has always purchased acertain component part from a supplier on the East Coast for$50 per part. The supplier is reliable and has maintained thesame price structure for years. Recently, improvements in operations and reduced product demand have cleared up somecapacity in Merrimac’s own plant for producing componentparts. The particular part in question could be produced at$40 per part, with an annual fixed investment of $25,000.Currently, Merrimac needs 300 of these parts per year.a. Should Merrimac make or buy the component part?b. As another alternative, a new supplier located nearby isoffering volume discounts for new customers of $50per part for the first 100 parts ordered and $45 per partfor each additional unit ordered. Should Merrimacmake the component in-house, buy it from the newsupplier, or stick with the old supplier?c. Would your decision change if Merrimac’s annual demand increased to 2000 parts? increased to 5000 parts?d. Develop a set of…
The purchase price of a machine is 10,000 TL and the expected scrap value is 2,000 TL. The economic life of the machine is 5 years. Calculate the depreciation amount in the 4th year according to the Sum of Year Figures method of this machine 010455871 B A 857,14 TL 1.11,11 TL 919010455 1.066,67 TL 9871 1.523,81 TL D E F 1.428,57 TL 4559 G 2.133.33 TL 919010455 H 1.142,86 TL
Gator Beach Marts, a chain of convenience grocery stores in the Fort Lauderdale area, has store hours that fluctuate from month to month as the tourist trade in the community varies. The utility costs for one of the company’s stores are listed below for the past six months. Required:1. Use the high-low method to estimate the cost behavior for the store’s utility costs. Express the cost behavior in formula form (Y = a + bX). What is the variable utility cost per hour of operation?2. Draw a scatter diagram of the store’s utility costs. Visually fit a cost line to the plotted data. Estimate the variable utility cost per hour of operation.3. Build a spreadsheet: Construct an Excel spreadsheet and use the Excel commands to perform a least-squares regression. Estimate the cost behavior for the store’s utility cost. Express the cost behavior in formula form. What is the variable utility cost per hour of operation?4. During July, the store will be open 300 hours. Predict the store’s total…
Future Value What is the future value in 11 years of $1,000 invested in an account with an APR of 8.9 percent: 1. Compounded continuously?
2) Paige Vincent is the RM at the City Center Novotel. For over 12 months, she has been working hard to improve the performance of her hotel. Paige just received the following performance data. Help her understand the revenue optimization trends for her property by completing the chart. Then, you will be asked to evaluate her efforts. City Center Novotel Performance: Occupancy % Novotel Comp Set Index This month 57.2 58.1 Last 3 months 55.1 57.7 Last 12 months 51.3 55.6 ADR This month $266.57 $270.15 Last 3 months $244.91 $269.69 Last 12 months $231.45 $268.95 RevPAR This month Last 3 months Last 12 months
A machine was purchased one year ago. Presently, the market value is $16,000 and it declines by $3,000 every year. For the next 3 years, the maintenance costs are as follows: Year Maintenance costs 1 $890 $1,290 $1,690 2 3 What is the marginal cost of extending the service for the 3rd year? A. $2,690 В. $5,490 C. $4,690 D. $5,690
2) - AMT, Inc., is considering the purchase of a digital camera for maintenance of design specifications by feeding digital pictures directly into an engineering workstation where computer-aided design files can be superimposed over the digital pictures. Differences between the two images can be noted, and corrections, as appropriate, can then be made by design engineers. a) You have been asked by management to determine the PW of the EVA of this equipment, assuming the following estimates: capital investment = $345,000; market value at end of year six = $120,000; annual revenues = $120,000; annual expenses = $8,000; equipment life = 6 years; effective income tax rate = 50%; and after-tax MARR = 9% per year. MACRS depreciation will be used with a five-year recovery period. b) Compute the PW of the equipment's ATCFS. Is your answer in Part (a) the same as your answer in Part (b)?
1. New Robotic Procedure (annuitisation focus) You have been asked to evaluate a new Robotic procedure for stroke rehabilitation which North- South Hospital is thinking of routinely providing. The Hospital first want to run a RCT to see if the cost is "worth it". The up-front cost of the actual robot is $300,000. There is an annual maintenance contract of $20,000 per annum. At the end of 5 years the robot will need to be replaced but will have a re-sale value of $20,000. 1a. What is the net present value of the robot? (Include the maintenance costs) and use a 5% discount rate. Hint – Use Drummond's first method (page 95 & 96 for simplicity). 1b. Now you need to work out the cost per procedure/person in order to undertake the economic evaluation. You have been provided with the following information: 1c. The site can provide 10 sessions per day per robot and 2 patients per session can be accommodated. What is the cost per session of the robot alone? What is the cost per session…