An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $35,000, an annual operating cost (AOC) of $9,000, and a service life of 2 years. Method B will cost $75,000 to buy and will have an AOC of $5,500 over its 4-year service life. Method C costs $125,000 initially with an AOC of $5,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 11% of its first cost. Perform a future worth analysis to select the method at /= 13% per year. The future worth of method A is $ -207859.7 x The future worth of method B is $ -148961.4 The future worth of method C is $ -388715.15 Method A is selected.

An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $35,000, an annual operating cost (AOC) of $9,000, and a service life of 2 years. Method B will cost $75,000 to buy and will have an AOC of $5,500 over its 4-year service life. Method C costs $125,000 initially with an AOC of $5,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 11% of its first cost. Perform a future worth analysis to select the method at /= 13% per year. The future worth of method A is $ -207859.7 x The future worth of method B is $ -148961.4 The future worth of method C is $ -388715.15 Method A is selected.

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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