Dog !Required informationAn electric switch manufacturing company is trying todecide between three different assembly methods.Method A has an estimated first cost of $35,000, anannual operating cost (AOC) of $6,000, and a servicelife of 2 years. Method B will cost $78,000 to buyand will have an AOC of $4,500 over its 4-year servicelife. Method C costs $115,000 initially with an AOC of$7,000 over its 8-year life. Methods A and B will haveno salvage value, but Method C will have equipmentworth 14% of its first cost.Perform a future worth analysis to select the method at i = 10% per year.The future worth of method A is $-360660.73The future worth of method B is $ -445930.90The future worth of method C is $-404576.75Method Ais selected.

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Perform a future worth analysis to select the method at i = 10% per year.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Dog

!
Required information
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 $6,000, and a service
life of 2 years. Method B will cost $78,000 to buy
and will have an AOC of $4,500 over its 4-year service
life. Method C costs $115,000 initially with an AOC of
$7,000 over its 8-year life. Methods A and B will have
no salvage value, but Method C will have equipment
worth 14% of its first cost.
Perform a future worth analysis to select the method at i = 10% per year.
The future worth of method A is $-360660.73
The future worth of method B is $ -445930.90
The future worth of method C is $-404576.75
Method A
is selected.

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