A manufacturing plant in Michigan has been contracting snow removal at a cost of $400/day. The past 3 years have produced heavy snowfalls, resulting in the cost of snow removal being of concern to the plant manager. The plant engineer has found that a snow-removal machine can be purchased for $25,000; it is estimated to have a useful life of 6 years and a zero salvage value at that time. Annual costs for operating and maintaining the equipment are estimated to be $5,000. Determine the break-even value for the number of days per year that snow removal is required in order to justify the equipment, based on a MARR of (a) 0%, (b) 10%, and (c) 15%.
A manufacturing plant in Michigan has been contracting snow removal at a cost of $400/day. The past 3 years have produced heavy snowfalls, resulting in the cost of snow removal being of concern to the plant manager. The plant engineer has found that a snow-removal machine can be purchased for $25,000; it is estimated to have a useful life of 6 years and a zero salvage value at that time. Annual costs for operating and maintaining the equipment are estimated to be $5,000. Determine the break-even value for the number of days per year that snow removal is required in order to justify the equipment, based on a MARR of (a) 0%, (b) 10%, and (c) 15%.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A manufacturing plant in Michigan has been contracting snow removal at a cost of $400/day. The past 3 years have produced heavy snowfalls, resulting in the cost of snow removal being of concern to the plant manager. The plant engineer has found that a snow-removal machine can be purchased for $25,000; it is estimated to have a useful life of 6 years and a zero salvage value at that time. Annual costs for operating and maintaining the equipment are estimated to be $5,000. Determine the break-even value for the number of days per year that snow removal is required in order to justify the equipment, based on a MARR of (a) 0%, (b) 10%, and (c) 15%.
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