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
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a. 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
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C. In another area, parts are inspected until 5 defective parts
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Parts are inspected on a production line for a defect. It is known that 5% of...
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Nobel Tech Inc. is building a new production line. The cost of the production line is...
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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
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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
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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
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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
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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
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June
9
$
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July
18
5,750
August
12
4,550
September
15
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October
21
6,350
November
24
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December
6
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Using the high-low method, estimate both the fixed and variable
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hour
__________________ ____________________ ____________
_______________ __________0
_________________ ____________________ _______________
Total cost at the high...
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