Question
In: Economics
PLEASE USE FACTORS IF POSSIBLE An electric switch manufacturing company is trying to decide between three...
PLEASE USE FACTORS IF POSSIBLE
An electric switch manufacturing company is trying to decide between three different assembly methods. Method A has an estimated first cost of $40,000, an annual operating cost (AOC) of $9000, and a service life of 2 years. Method B will cost $80,000 to buy and will have an AOC of $6000 over its 4-year service life. Method C costs $130,000 initially with an AOC of $4000 over its 8-year life. Methods A and B will have no salvage value, but Method C will have equipment worth 10% of its first cost. Perform both (a) future worth, and (b) present worth analyses to select the method at i = 10% per year.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
An electric switch manufacturing company is try- ing to decide between three different assembly methods. Method...
An electric switch manufacturing company is try-
ing to decide between three different assembly
methods. Method A has an estimated first cost of
$40,000, an annual operating cost (AOC) of $9000,
and a service life of 2 years. Method B will cost
$80,000 to buy and will have an AOC of $6000
over its 4-year service life. Method C costs
$130,000 initially with an AOC of $4000 over its
8-year life. Methods A and B will have no salvage
value,...
Assume that you are working at a manufacturing company and trying to decide between the following...
Assume that you are working at a manufacturing company and
trying to decide between the following two projects:
Year-End Cash Flows $ thousands)
Project
0
1
2
A
-27
16
21
B
-77
40
50
Q1. If the cost of capital is 8%, use the incremental IRR rule
to make the decision.
Q2. If the cost of capital is the same as the Q1, determine the
NPV of each project.
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Playhouse (minor projects) -25(0) 15(1) 19(2)
22.2%(IRR) first project for the years -75(0)
38(1) 51(2) 11.6%(IRR) for second project You can
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Actual and estimated data for manufacturing overhead, direct labor
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Estimated...
4. An electric switch manufacturing company must choose one of three different assembly methods. Method A...
4. An electric switch manufacturing company must choose one of
three different assembly methods. Method A will have a first cost
of $20,000, an annual operating cost of $5000, and a service life
of 2 years. Method B will cost $50,000 to buy and will have an
annual operating cost of $7000 over its 4-year service life. Method
C will cost $100,000 initially with an annual operating cost of
$5000 over its 8-year life. Methods A and B will have...
4. An electric switch manufacturing company must choose one of three different assembly methods. Method A...
4. An electric switch manufacturing company must choose one of
three different assembly methods. Method A will have a first cost
of $20,000, an annual operating cost of $5000, and a service life
of 2 years. Method B will cost $50,000 to buy and will have an
annual operating cost of $7000 over its 4-year service life. Method
C will cost $100,000 initially with an annual operating cost of
$5000 over its 8-year life. Methods A and B will have...
Manufacturing Company is trying to decide whether to continue manufacturing a part or to buy it...
Manufacturing Company is trying to decide whether to continue
manufacturing a part or to buy it from an outside supplier. The
part, called CIO, is a component of the company’s finished product.
The following information was collected from the accounting records
and production data for the year ending December 31, 2018. 1. 8,100
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The management of Shatner Manufacturing Company is trying to decide whether to continue manufacturing a part...
The management of Shatner Manufacturing Company is trying to
decide whether to continue manufacturing a part or to buy it from
an outside supplier. The part, called CISCO, is a component of the
company’s finished product.
The following information was collected from the accounting records
and production data for the year ending December 31, 2020.
1. 8,100 units of CISCO were produced in the Machining
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2. Variable manufacturing costs applicable to the production of
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direct...
The management of Pina Manufacturing Company is trying to decide whether to continue manufacturing a part...
The management of Pina Manufacturing Company is trying to
decide whether to continue manufacturing a part or to buy it from
an outside supplier. The part, called CISCO, is a component of the
company’s finished product.
The following information was collected from the accounting records
and production data for the year ending December 31, 2017.
1. 7,900 units of CISCO were produced in the Machining
Department.
2. Variable manufacturing costs applicable to the production of
each CISCO unit were:
direct...
The management of Shatner Manufacturing Company is trying to decide whether to continue manufacturing a part...
The management of Shatner Manufacturing Company is trying to
decide whether to continue manufacturing a part or to buy it from
an outside supplier. The part, called CISCO, is a component of the
company’s finished product.
The following information was collected from the accounting records
and production data for the year ending December 31, 2020.
1. 8,000 units of CISCO were produced in the Machining
Department.
2. Variable manufacturing costs applicable to the production of
each CISCO unit were:
direct...
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