Southern Environmental Consulting (SEC), Inc., designs plans and specifications for asbestos abatement (removal) projects in public, private,
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• Subcontract option. The client is charged $400 per sample, which is $100 above the subcontracting fee of $300. Labor expenses are $1,500 per year, and shipping expenses are estimated to be $0.50 per sample.
• TEM purchase option. The purchase and installation cost for the TEM is $415,000. The equipment would last for eight years, at which time it should have no salvage value. The design and renovation cost is estimated to be $9,500. The client is charged $300 per sample based on the current market price. One full-time manager and two part-time technicians are needed to operate the laboratory. Their combined annual salaries will be $50,000. Material required to operate the lab includes carbon rods, copper grids, filter equipment, and acetone. The costs of these materials are estimated at $6,000 per year. Utility costs, operating and maintenance costs, and the indirect labor needed to maintain the lab are estimated at $18,000 per year. The extra income-tax expenses would be $20,000.
(a) Determine the cost of an air-sample test by the TEM laboratory (in-house).
(b) What is the required number of air samples per year to make the two options equivalent?
Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...
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