Question

In: Economics

The plant manager at a company would like to perform an analysis for a new $125,000...

The plant manager at a company would like to perform an analysis for a new $125,000 machine. If she estimates benefits of $20,000 in the first year, and benefits are increasing by 10% per year

a. What is the payback period for the machine? (Hint: The Payback Period is the length of time required to recover the initial cash outflows through the successive cash inflows, thus find the time when Cumulative PW (at 0%) becomes positive)

b. Suppose that the machine life is 5 years with no salvage value at the end of its useful life. If the MARR of the company is 8% per year, is this investment acceptable? Why?

Solutions

Expert Solution

a)

Payback period = 5 + |-2898| / 32210 = 5 + (2898 / 32210) = 5.1 years

b)

PW = $-28,916.41

Since PW is negative, this investment is not acceptable.

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

The operations manager of a large production plant would like to estimate the mean amount of...
The operations manager of a large production plant would like to estimate the mean amount of time a worker takes to assemble a new electronic component. After observing 135 workers assembling similar devices, the manager noticed that their average time was 16.0 minutes with a standard deviation of 3.7 minutes. Construct a 95% confidence interval for the mean assembly time. what is the margin of error of the confidence interval? new assume that the population standard deviation of assembly time...
The operations manager of a large production plant would like to estimate the mean amount of...
The operations manager of a large production plant would like to estimate the mean amount of time a worker takes to assemble a new electronic component. Assume that the standard deviation of this assembly time is 3.6 minutes. After observing 125 workers assembling similar devices, the manager noticed their average time was 16.2 minutes. Construct a 95% confidence interval for the mean assembly time.
The operations manager of a large production plant would like to estimate the average amount of...
The operations manager of a large production plant would like to estimate the average amount of time workers take to assemble a new electronic component. After observing a number of workers assembling similar devices, she estimates that the standard deviation is 0.25 hour. How large a sample of workers should she select if she wishes to estimate the mean assembly time to within 3.2 minutes at the 98% confidence level?
The operations manager of a large production plant would like to estimate the average amount of...
The operations manager of a large production plant would like to estimate the average amount of time workers take to assemble a new electronic component. After observing a number of workers assembling similar devices, she guesses that the standard deviation is 10 minutes. How large a sample of workers should she take if she wishes to estimate the mean assembly time to within 20 seconds. Assume the confidence level to be 97%.
As the quality control manager at a plant that produces cereal, you would like to ensure...
As the quality control manager at a plant that produces cereal, you would like to ensure that the average amount of cereal being put in each box is 455g. A random sample is contained below (this sample is also contained in the DATA 2 tab of the downloaded Excel file). At a 5% significance level, can you conclude that the average fill level is different than 455g? Cereal Box Fill Levels 451.48 453.62 452.03 455.14 457.1 455.61 458.61 458.96 452.53...
The operations manager of a large production plant would like to estimate the mean amount of...
The operations manager of a large production plant would like to estimate the mean amount of time a worker takes to assemble a new electronic component. Assume that the standard deviation of this assembly time is 3.6 minutes. After observing 120 workers assembling similar devices, the manager noticed that their average time was 16.2 minutes. Construct a 92% confidence interval for the mean assembly time. How many workers should be involved in this study in order to have the mean...
(A-Grade) The operations manager of a large production plant would like to estimate the mean amount...
(A-Grade) The operations manager of a large production plant would like to estimate the mean amount of time a worker takes to assemble a new electronic component. Assume that the population standard deviation of time for this assembly is 3.6 minutes. 1. After observing 120 workers assembling similar devices, the manager noticed that their average time was 16.2 minutes. Construct a 92% confidence interval for the mean assembly time. 2. How many workers should be involved in this study in...
In a company that makes assorted clocks, the new manager will like to report on the...
In a company that makes assorted clocks, the new manager will like to report on the sales mix of the company. The company’s fixed cost for the three styles of clocks is $729,000. Time Tellers sales mix, and contribution margin per crate are shown below: Product Type Sales Mix Contribution Margin per crate Red 35% $140 Brown 65% $130 Green 25% $66 Required: a. Based on the current sales mix, compute the weighted average contribution margin per crate. b. Compute...
A manager of the company would like to determine average delivery time of the products. A...
A manager of the company would like to determine average delivery time of the products. A sample of 25 customers is taken. The average delivery time in the sample was four days with a standard deviation of 1.2 days. Suppose the delivery times are normally distributed. Provide a 95 % confidence interval for the mean delivery time. The manager claims that the average delivery time of their products does not exceed 3 days. Write the null and alternative hypothesis regarding...
Interns, Mr. Howell, the prestigious founder and owner of our company would like you to perform...
Interns, Mr. Howell, the prestigious founder and owner of our company would like you to perform an analysis on the company’s weekly revenues. He is requiring that the current weekly marginal revenue be at least $5,000 per week and if it is not currently at that level how fast should sales be changing to reach the target marginal revenue level. The most current information regarding weekly revenues can be found in Mr. Howell’s email below. To be solved using derivatives....
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT