6-39.

a. Compare the probable part cost from Machine A and Machine B, assuming that each will make the part to the same specification. Which machine yields the lowest part cost? Assume that the MARR = 10% per year. (6.5)

b. If the cost of labor can be cut in half by using part-time employees, which machine should be recommended? (6.5) Machine A Machine B Initial capital investment $35,000 $150,000 Life 10 years 8 years Market value $3,500 $15,000 Parts required per year 10,000 10,000 Labor cost per hour $16 $20 Time to make one part 20 minutes 10 minutes Maintenance cost per year $1,000 $3,000