Question
A company is considering two machines: A and B. Ae has an initial cost of $85,000, a salvage value of $10,000, and an annual maintenance
A company is considering two machines: A and B. Ae has an initial cost of $85,000, a salvage value of $10,000, and an annual maintenance costs of $8,500. A has the capacity to manufacture 15 catapults per hour and has a useful life of 8 years. B has an initial cost of $55,000, salvage value of $6,000, and an annual maintenance cost of $5,500. B has the capacity to manufacture 12 catapults per hour, and has a useful life of 4 years. Both machines require one operator paid $15 per hour during production.
Choose the correct setup for project A:
NPW(SG) = -85,000 * (P/A, 12%, 8) + 10,000 * (P/F, 12%, 8) 8,500 [($15 / 15) * X]
EUAW(SG) = -85,000 * (A/P, 12%, 8) + 10,000 * (A/F, 12%, 8) 8,500 ($15 / 15) * X
NPW(SG) = -85,000 * (A/P, 12%, 8) + 10,000 * (A/F, 12%, 8) 8,500 ($15 / 15) * X
EUAW(SG) = -85,000 * (A/P, 12%, 16) + 10,000 * (A/F, 12%, 16) 8,500 ($15 / 15) * X
Choose the correct setup for B
EUAW(R) = -55,000*(A/P, 12% , 16) + 6,000 * (A/F, 12%, 16) 5,500 [($15 / 12) * X]
EUAW(R) = -55,000*(A/P, 12% ,4) + 6,000 * (A/F, 12%, 4) 5,500 [($15 / 12) * X]
NPW(R) = -55,000*(P/A, 12% ,4) + 6,000 * (P/F, 12%, 4) 5,500 [($15 / 12) * X]
NPW(R) = -55,000*(A/P, 12% ,4) + 6,000 * (A/F, 12%, 4) 5,500 [($15 / 12) * X]
And determine the annual production quantity when the two machines are equally attractive and have a MARR of 12%.
Thank you! I will rate and the explanation doesn't have to be that detailed, I'm just double checking work.
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