A machine that produces a certain piece must be turned off by the operator after each piece is completed. The machine "coasts" for 15 seconds after it is turned off, thus preventing the operator from removing the piece quickly before producing the next piece. An engineer has suggested installing a brake that would reduce the coasting time to 3 seconds. The machine produces 50,000 pieces a year. The time to produce one piece is 1 minute 45 seconds, excluding coastint time. The operator earns $11 an hour and direct costs for operation are $4 an hour. The direct costs are incurred whenever the operator has to work. The brake will require servicing every 477 hours of operation. It will take the operator 30 minutes to perform the necessary maintenance and will require $43 in parts and material. The brake is expected to last 7,500 hours of operation (with proper maintenance) and will have no salvage value. How much could be spent for the brake if the Minimum Attractive Rate of Return is 10% compounded annually? Enter your answer in this format: 1234.56
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- A machine that produces a certain piece must be turned off by the operator after each piece is completed. The machine "coasts" for 15 seconds after it is turned off, thus preventing the operator from removing the piece quickly before producing the next piece. An engineer has suggested installing a brake that would reduce the coasting time to 3 seconds. The machine produces 50,000 pieces a year. The time to produce one piece is 1 minute 45 seconds, excluding coastint time. The operator earns $13 an hour and direct costs for operation are $2 an hour. The direct costs are incurred whenever the operator has to work. The brake will require servicing every 587 hours of operation. It will take the operator 30 minutes to perform the necessary maintenance and will require $60 in parts and material. The brake is expected to last 7,500 hours of operation (with proper maintenance) and will have no salvage value. How much could be spent for the brake if the Minimum Attractive Rate of Return is 10%…A machine that produces a certain piece must be turned off by the operator after each piece is completed. The machine "coasts" for 15 seconds after it is turned off, thus preventing the operator from removing the piece quickly before producing the next piece. An engineer has suggested installing a brake that would reduce the coasting time to 3 seconds. The machine produces 50,000 pieces a year. The time to produce one piece is 1 minute 45 seconds, excluding coasting time. The operator earns $12 an hour and direct costs for operation are $2 an hour. The direct costs are incurred whenever the operator has to work. The brake will require servicing every 594 hours of machine operation. It will take the operator 30 minutes to perform the necessary maintenance and will require $42 in parts and materials. The brake is expected to last 7,500 hours of operation (with proper maintenance) and will have no salvage value. How much could be spent for the brake if the Minimum Attractive Rate of…An assembly operation at a software company currently requires $100,000 per year in labor costs. A robot can be purchased and installed to automate this operation, and the robot will cost $200,000 with no MV at the end of its 10-year life. The robot, if acquired, will be depreciated using SL depreciation to a terminal BV of zero after 10 years. Maintenance and operation expenses of the robot are estimated to be $64,000 per year. Thecompany has an effective income tax rate of 40%. Invested capital must earn at least 8% after income taxes are taken into account. Solve, a. Use the IRR method to determine if the robot is a justifiable investment. b.If MACRS (seven-year recovery period) had been used in Part (a), would the after-tax IRR be lower or higher than your answer to Part (a)?
- Jackson Inc. disposes of other companies’ toxic waste. Currently, Jackson loads the waste by handinto a truck, which requires labor of $20 per load. Jackson is considering a machine that wouldreduce the amount of time needed to load the waste. The machine would cost $200,000 but wouldreduce labor cost to $5 per load. Assume that Jackson averages 10,000 loads per year. How manyyears (rounded to 2 decimal places) would it take for Jackson to recover the cost of the new machine?An automobile manufacturer is considering a change in an assembly line that should save moneyby reducing labor and material cost. The change involves the installation of four new robots thatwill automatically install windshields. The cost of the four robots, including installation and initial programming, is $400,000. Current practice is to amortize the initial cost of robots over two years on a straight-line basis. The process engineer estimates that one full-time technician will be needed to monitor, maintain, and reprogram the robots on an ongoing basis. This person will cost approximately $60,000 per year. Currently, the company uses four full-time employees on this job and each makes about $52,000 per year. One of these employees is a material handler, and this person will still be needed with the new process. To complicate matters, the process engineer estimates that the robots will apply the windshield sealing material in a manner that will result in a savings of $0.25 per…An assembly operation at a software company now requires $100,000 per year in labor costs. A robot can be purchased and installed to automate this operation. The robot will cost $200,000 and will have no market value at the end of the 10-year study period. Maintenance and operation expenses of the robot are estimated to be $64,000 per year. Invested capital must earn at least 12% per year. Use the IRR method to determine if the robot is a justifiable investment.
- 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 $15,000. The installation of machine can reduce annual labor cost by $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?It is planning to reduce its labor costs by automating a critical task that is currently performed manually.The cost to purchase a new machine is $15,000. The installation of machine can reduce annual labor cost by$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%.A mechanical engineer who designs and sells equipment that automates manual labor processes is offering a machine/robot combination that will significantly reduce labor costs associated with manufacturing garage-door opener transmitters. The equipment has a first cost of $170,000, an estimated annual operating cost of $54,000, a maximum useful life of 5 years, and a $20,000 salvage value anytime it is replaced. The existing equipment was purchased 12 years ago for $65,000 and has an annual operating cost of $78,000. At most, the currently owned equipment can be used 2 more years, at which time it will be auctioned off for an expected amount of $6000, less 33% paid to the company handling the auction. The same scenario will occur if the currently owned equipment is replaced now. Determine the defender and challenger estimates of P, n, S, and AOC in conducting a replacement analysis today at an interest rate of 20% per year.
- Bramble Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $88,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $12,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 11,000 frames per year, generating a total contribution margin of $85,500. Martson Molders currently sells a molding machine that will allow Bramble Pix to increase production and sales to 15,000 frames per year. The machine, which has a ten-year life, sells for $131,000 and would cost $12,000 per year to operate. Bramble Pix's current machine costs only $8,000 per year to operate. If Bramble Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $19,500 at the end of its ten-year life.…A plant engineer wishes to know which of two types of lightbulbs should be used to light a warehouse. The bulbs that are currently used cost $49.40 per bulb and last 14,500 hours before burning out. The new bulb (at $63.3 per bulb) provides the same amount of light and consumes the same amount of energy, but it lasts twice as long. The labor cost to change a bulb is $16.00. The lights are on 20 hours a day, 365 days a year. (Assume that the firm's marginal tax rate is 25%.) If the firm's MARR is 16%, what is the maximum price (per bulb) the engineer should be willing to pay to switch to the new bulb? Round the service life of the old bulb to the nearest whole number. Click the icon to view the interest factors for discrete compounding when /= 16% per year. The maximum price per new bulb the engineer should be willing to pay is $ (Round to one decimal place.)Concord Pix currently uses a six-year-old molding machine to manufacture silver picture frames. The company paid $95,000 for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $12,000 overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells 9.000 frames per year, generating a total contribution margin of $92,500. Martson Molders currently sells a molding machine that will allow Concord Pix to increase production and sales to 12,000 frames per year. The machine, which has a ten-year life, sells for $135,000 and would cost $10,000 per year to operate. Concord Pix's current machine costs only $8,000 per year to operate. If Concord Pix purchases the new machine, the old machine could be sold at its book value of $5,000. The new machine is expected to have a salvage value of $19,900 at the end of its ten-year life. Concord…