Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A company is planning to install a new automated plastic-molding press. Four different presses are available. The initial capital investments and annual expenses for
A company is planning to install a new automated plastic-molding press. Four different presses are available. The initial capital investments and annual expenses for these four mutually exclusive alternatives are as follows: Press Capital investment Useful life (years) Annual expenses Power Labor Maintenance Property taxes & insurance Total annual expenses P1 $24,000 5 2,720 26,400 1,600 480 $31,200 P2 $30,400 5 2,720 24,000 1,800 608 $29,128 P3 $49,600 5 4,800 16,800 2,600 992 $25,192 P4 $52,000 5 5,040 14,800 2,000 1,040 $22,880 Assume that each press has the same output capacity and has no market value at the end of its useful life; the selected analysis period is five years. Which press should be chosen? Use MARR = 20% per year.
Step by Step Solution
★★★★★
3.27 Rating (165 Votes )
There are 3 Steps involved in it
Step: 1
Press P4 minimizes the Present Worth and the Net Worth values of total costs and hence is the ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started