Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $34,000, an annual operating cost (AOC) of $5,000, and a service life of 2 years. Method B will cost $77,000 to buy and will have an AOC of $4,000 over its 4-year service life. Method C costs $145,000 initially with an AOC of $6,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 13% of its first cost. Perform a present worth analysis to select the method at i= 14% per year. The present worth of method A is $ The present worth of method B is $ The present worth of method C is $ Method (Click to select) is selected.
Required information An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $34,000, an annual operating cost (AOC) of $5,000, and a service life of 2 years. Method B will cost $77,000 to buy and will have an AOC of $4,000 over its 4-year service life. Method C costs $145,000 initially with an AOC of $6,500 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 13% of its first cost. Perform a present worth analysis to select the method at i= 14% per year. The present worth of method A is $ The present worth of method B is $ The present worth of method C is $ Method (Click to select) is selected.
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 4EB: Dimitri Designs has capacity to produce 30,000 desk chairs per year and is currently selling all...
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