Question
In: Economics
You supervise an aging production line that constantly needs maintenance and new parts. Last month you...
You supervise an aging production line that constantly needs maintenance and new parts. Last month you spent $25,000 replacing a failed controller. Should the following plan be accepted if the interest rate is 15%? The net installed cost of the new line to replace the old line is $600,000 with a useful life of six years. In the first year its operating cost will be $100,000, and it will generate annual revenues of $300,000.
Solutions
Expert Solution
Present worth = -600000 + (300000 - 100000)*(P/A,15%,6)
= -600000 + (300000 - 100000)*3.784483
= 156896.60
As NPW > 0, new line should be installed
Rahul Sunny answered 2 years agoRelated Solutions
1. You supervise an aging production line that constantly needs maintenance and new parts. Last month...
1. You supervise an aging production line that constantly needs
maintenance and new parts. Last month you spent $25,000 replacing a
failed controller. Should the following plan be accepted if the
interest rate is 15%? The net installed cost of the new line to
replace the old line is $600,000 with a useful life of six years.
In the first year its operating cost will be $100,000, and it will
generate annual revenues of $300,000. Each year the operating cost...
Parts are inspected on a production line for a defect. It is known that 5% of...
Parts are inspected on a production line for a defect. It is
known that 5% of the pieces have this defect. (this applies to 5
parts of the problem)
a. If an inspector examines 12 parts, what is the probability of
finding more than 2 defective parts?
b. What is the expected number of defective parts in 12-piece
sample?
C. In another area, parts are inspected until 5 defective parts
are found, then the machine is stopped to reset the...
Parts are inspected on a production line for a defect. It is known that 5% of...
Parts are inspected on a production line for a defect. It is
known that 5% of the pieces have this defect. (this applies to 5
parts of the problem)
to. If an inspector examines 12 parts, what is the probability of
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b. What is the expected number of defective parts in 12-piece
sample? (10 pts)
c. In another area, parts are inspected until 5 defective parts are
found, then the machine is...
A manufacturer offers a 36-month warranty on a new line of its products. Production engineers believe...
A manufacturer offers a 36-month warranty on a new line of its
products. Production engineers believe the lifetime, Y, of any
randomly selected item from this new line has a normal distribution
with mean µ = 45 and standard deviation σ = 7. Accordingly, the
probability an item fails within the first 36 months after purchase
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Thus, under typical conditions only about 10% of the items will
fail early, and, since this percentage is so low, managers and
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Nobel Tech Inc. is building a new production line. The cost of the production line is...
Nobel Tech Inc. is building a new production line. The cost of
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million in the following year. The production line is expected to
bring in cash inflow of $1.6 million in year 2, and $2 million each
year from year 3 to year 7. The company uses a cost of capital of
10% on all the projects.
The IRR of the project is closest to ___________.
Group of...
Nobel Tech Inc. is building a new production line. The cost of the production line is...
Nobel Tech Inc. is building a new production line. The cost of
the production line is $3 million in the current year and $2
million in the following year. The production line is expected to
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each year from year 3 to year 7. The company uses a cost of capital
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The discounted payback period of this project is
____________.
Group of...
The following information is available for a company’s maintenance cost over the last seven months. Month...
The following information is available for a company’s
maintenance cost over the last seven months.
Month
Maintenance Hours
Maintenance Cost
June
11
$
5,050
July
17
6,850
August
13
5,650
September
16
6,550
October
22
8,350
November
25
9,250
December
7
3,850
Using the high-low method, estimate both the fixed and variable
components of its maintenance cost.
High-Low method - Calculation of variable cost per maintenance
hour
Change in cost
Cost at high point minus cost at low point
Variable...
The following information is available for a company’s maintenance cost over the last seven months. Month...
The following information is available for a company’s
maintenance cost over the last seven months.
Month
Maintenance Hours
Maintenance Cost
June
10
$
3,950
July
19
5,390
August
11
4,110
September
14
4,590
October
20
5,550
November
23
6,030
December
5
3,150
Using the high-low method, estimate both the fixed and variable
components of its maintenance cost.
High-Low method - Calculation of variable cost per maintenance
hour
Total cost at the high point
Variable costs at the high point:...
The following information is available for a company’s maintenance cost over the last seven months. Month...
The following information is available for a company’s
maintenance cost over the last seven months.
Month
Maintenance Hours
Maintenance Cost
June
9
$
3,950
July
18
5,750
August
12
4,550
September
15
5,150
October
21
6,350
November
24
6,950
December
6
3,350
Using the high-low method, estimate both the fixed and variable
components of its maintenance cost.
High- Low method calculation of variable cost per maintenance
hour
__________________ ____________________ ____________
_______________ __________0
_________________ ____________________ _______________
Total cost at the high...
your firm needs a computerized line boring machine which costs 80,000 and requires 20,000 in maintenance...
your firm needs a computerized line boring machine which costs
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A) -2,374
B) -37,539
C) -32,905
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